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President Obama’s Plan for Clean Energy and Energy Efficiency in Federal Buildings

SOURCE: AP/Carolyn Kaster

The Capitol dome is seen behind the Capitol Power Plant in Washington, D.C., Monday, June 24, 2013. The plant provides power to buildings in the Capitol Complex.

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Detailing his climate action initiative during a speech at Georgetown University on June 25, President Barack Obama put forth a series of steps that his administration will take to reduce carbon emissions, increase climate resilience, and provide climate leadership at the international level. Two of the steps mentioned in his speech—increased energy efficiency and renewable-energy generation at the federal level—while not receiving as much media attention as the Keystone XL pipeline and efforts to reduce carbon pollution from power plants, deserve a closer look. Given the size of the federal government and the fact that it is the largest energy consumer in the United States, the energy savings and emissions reductions resulting from federal leadership in clean energy and energy efficiency could be considerable.

In 2010 the government leased or owned 500,000 buildings that contributed to the federal government’s 1.5 percent share of the nation’s annual energy use and greenhouse-gas emissions. To power the more than 3 billion square feet of federal office space, the government spends a staggering $7 billion per year. Recognizing the opportunities for energy and cost savings, President Obama laid out clean energy and energy-efficiency initiatives for federal buildings in his Climate Action Plan.

President Obama’s plan raises the federal government’s renewable-energy goal from 7.5 percent to 20 percent by 2020, meaning that 20 percent of the electricity consumed by federal agencies must come from renewable sources either through on-site generation, renewable power purchases, or renewable-energy certificates, or RECs. The original renewable-energy goal for federal agencies was mandated through the Energy Policy Act of 2005, which was signed into law by former President George W. Bush, and set renewable-energy requirements of 3 percent for fiscal years 2007 to 2009, 5 percent for FY 2010 to 2012, and 7.5 percent for FY 2013 and thereafter.

On energy efficiency, President Obama’s plan does not name a new energy intensity—or energy use per square foot—goal but it does look to strengthen ongoing efficiency efforts through standardizing federal building codes, increasing the ability to manage energy consumption within federal facilities, and partnering with the private sector to create standardized contracts for energy-efficiency investments. Existing efforts were established under the Energy Independence and Security Act of 2007, or EISA 2007—also signed by President Bush. EISA 2007 set comprehensive energy-management requirements, including energy-intensity reduction goals for federal buildings, facility energy-tracking standards, new building performance requirements, standards for energy-savings performance contracts, federal agency annual reporting guidelines, and energy-efficient product procurement requirements.

The energy-intensity reduction goal is especially noteworthy because it requires federal agencies to reduce energy consumption per square foot by 30 percent by 2015, compared to 2003 energy-intensity levels. As they have over the past few decades, federal energy-intensity goals reduce energy use and waste in buildings and result in significant cost savings. In a weekly address in 2009, President Obama stated that making 75 percent of federal buildings more energy efficient would save taxpayers $2 billion per year.

Fortunately, the federal government’s energy-intensity and renewable-energy goals are within reach. In her June 27 testimony before the House Subcommittees on Oversight and Energy, Department of Energy Deputy Assistant Secretary for Energy Efficiency Kathleen Hogan stated that the federal government had met 7.1 percent of its electricity needs with renewable-energy sources, exceeding its goal of 5 percent for 2012. Compared to 2003, the federal government had achieved more than a 20 percent reduction in energy use per square foot in 2012. These efforts have led to a 15 percent reduction in greenhouse-gas emissions and demonstrate the importance of energy policies that drive continued efficiency upgrades and clean energy deployment.

Aside from overarching federal energy targets, there are two initiatives that can significantly impact energy efficiency and renewable-energy efforts at the federal level: agency-level energy goals and energy-savings performance contracts. These initiatives have already contributed to the federal government’s overall renewable-energy and energy-efficiency strategy, but there is a need for continued efforts on both fronts.

The Department of Defense has become a leader in setting aggressive energy policies that prioritize clean energy consumption at the agency level and could influence other departments to set their own targets. As the federal government’s largest energy consumer, the Defense Department accounts for about half of all federal electricity consumption and therefore has the potential to meet half of the federal energy-intensity and renewable-energy requirements by 2020. In 2009 the department updated its energy-performance goals to include a requirement that it produce or procure 25 percent of its electricity from renewable sources by 2025, but it will have to step up its efforts to achieve that and other energy goals in the ascribed timetable.

According to the Defense Department’s June 2013 Annual Energy Management report, it failed to meet federal renewable-energy or energy-intensity goals during FY 2012. Despite an energy-intensity target of 21 percent, the Defense Department only reduced facility energy intensity by 17.7 percent in 2012, and only 4 percent of the department’s electricity use came from renewable sources, compared to a target of 5 percent. When total renewable-energy production is considered rather than consumption alone, 9.6 percent of the Defense Department’s electricity came from renewable sources, which counts toward its 25 percent by 2025 goal.

Fortunately, the department’s renewed commitment to increase renewable-energy generation capacity on Army, Navy, and Air Force installations from the current 132 megawatts to 3 gigawatts by 2025 will move the department closer to its renewable-energy goal. In addition, this new commitment could create a “green” standard for renewable-energy deployment among federal agencies and encourage those that are lagging behind to expand their efforts.

Another factor that could spur greater energy-efficiency and renewable-energy use is the energy-savings performance contract, or ESPC. Energy-savings performance contracts are public-private partnerships that allow the federal government to make energy-efficiency upgrades or install renewable-energy technologies to federal buildings at a net-zero cost since project financing is repaid through energy cost savings over the life of the project. Existing in one form or another since the Carter administration, energy-savings contracts have been an effective bipartisan tool to reduce energy use and create jobs, especially during tough economic times. To date, ESPCs have provided cumulative energy cost savings of $7.2 billion and stimulated more than $2.72 billion in energy-efficiency and renewable-energy investments.

The Bush administration championed energy-savings performance contracts through legislation, such as the Energy Independence and Security Act of 2007, which permanently reauthorized and facilitated their use, and President Obama has continued to build upon those efforts. In 2011 the White House challenged federal agencies to enter into $2 billion in energy-savings performance contracts by the end of 2013. As of June 2013 federal agencies went beyond the stated goal and identified $2.3 billion worth of projects, highlighting the desire within the government for ESPCs and energy upgrades.

Despite that desire, ESPCs are underutilized partly due to lack of education and awareness among federal agencies, President Obama’s $2 billion challenge, however, raised the profile of ESPCs and gave federal agencies an achievable goal to work toward. The president should continue to promote the use of ESPCs by issuing a new and even more ambitious challenge.

The new federal renewable-energy and energy-efficiency initiatives set forth in President Obama’s Climate Action Plan build upon previous goals and demonstrate a commitment to federal leadership. Energy goals at the agency level, such as those at the Department of Defense, can ensure that the federal government continues to move toward its energy-intensity and renewable-energy targets. Further, the continued use of energy-savings performance contracts will be key to driving greater reductions in energy intensity and scaling up renewable-energy use.

Mari Hernandez is a Research Associate on the Energy team at the Center for American Progress.

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