THE WHITE HOUSE

Office of the Press Secretary

PRESIDENT CLINTON:

LEADING THE FIGHT AGAINST GLOBAL WARMING

June 3, 1999

Leading By Example. The Federal Government is the nation's largest energy consumer with an annual bill of over $8 billion - more than $4 billion to heat, cool, and power its 500,000 buildings. Federal agencies have already reduced energy consumption 17% per square foot relative to 1985 levels. Today's Order builds on that progress by:

Setting Aggressive Goals -- The Order requires Federal agencies to achieve by 2010:

• 35% greater energy efficiency in buildings relative to 1985 levels; and,
• 30% cut in greenhouse gas emissions from building-related energy use relative to 1990.

Mobilizing Cutting-Edge Strategies -- The Order directs agencies to maximize the use of:

• Energy Saving Performance Contracts and Utility Contracts, in which private companies make energy improvements on Federal facilities at their own expense and receive a portion of the resulting savings;
• Life-cycle cost analysis, so agencies see the long-term savings from energy investments;
• ENERGY STAR & other energy efficient products, everything from light bulbs to boilers; and,
• Renewable energy technologies and sources (solar, wind, geothermal, and biomass).

Strengthening Accountability -- The Order requires that annual scorecards evaluating agency progress be submitted to the President; gives OMB, in consultation with the Department of Energy (DOE), oversight authority; and directs agencies to appoint energy management teams to help meet the goals of the Order.

Concrete Steps, Concrete Savings. The partnership announced today between the Department of Defense and Viron/Pepco Energy Services -- the largest-ever Energy Saving Performance Contract -- will cut energy use in 837 buildings at Ft. Belvoir, Ft. A.P. Hill, Ft. Meyer, Ft. McNair, and Ft. Meade. Other examples of energy-saving actions of the kind today's Order is designed to promote include:

• The Defense Logistics Agency (DLA) and the DOE have teamed up to offer high efficiency compact florescent light bulbs at half price to Federal purchasers;
• 18 Federal agencies (including the Smithsonian Institution, NASA, and the Postal Service) will receive DOE funding for more than 100 renewable energy systems;
• A New York GSA building housing the FBI and the IRS has been retrofitted to ENERGY STAR Building standards, with an annual energy cost savings of $1.3 million; and,
• Environmental Protection Agency's laboratory in Richmond, California has become the first major Federal facility supplied 100% with renewable energy (geothermal and biomass).

Incentives For Businesses and Consumers, Too. To help American businesses and consumers reap the same kinds of energy and cost savings, the President today also called on Congress to enact his proposed $3.6 billion package of tax incentives for the purchase of energy efficient homes, appliances, cars, and energy from renewable sources.

           The President's New Energy Efficiency Executive Order
                               June 3, 1999

The Executive Order to be issued by President Clinton today helps meet the challenge of global warming by significantly improving energy efficiency in Federal buildings. By 2010, the resulting energy savings will reduce annual greenhouse gas emissions by an amount equal to 2.4 million metric tons of carbon (MMTCE) - the equivalent of taking 1.7 million cars off the road - and save taxpayers over $750 million a year. The Order will also expand markets for renewable technologies, reduce air pollution, and serve as a powerful example to American businesses and consumers who can reap substantial benefits from energy improvements.

Aggressive New Goals

The Federal Government is the nation's largest energy consumer with an annual bill of over $8 billion - more than $4 billion to heat, cool, and power its 500,000 buildings. Federal agencies have already reduced energy consumption 17% per square foot relative to 1985 levels. Today's Order builds on that progress, extending current energy efficiency goals and setting new goals for greenhouse gas reductions, renewable energy use, and water conservation.

• New Energy Efficiency Goal for Facilities. The Order requires each Federal agency to improve its energy efficiency in Federal buildings by 35% relative to 1985 levels by 2010.
• New Energy Efficiency Goal for Industrial and Laboratory Facilities. The Order requires each Federal agency to improve its energy efficiency in industrial and laboratory facilities by 25% relative to 1990 by 2010.
• New Greenhouse Gas Reduction Goal. The Order requires each Federal agency to reduce greenhouse gas emissions that result from building energy use by 30 % below 1990 levels by 2010. This is the Federal Government's first-ever goal tied to greenhouse gas reductions.
• Expanded Use of Renewable Energy. The Order requires Federal agencies to expand their use of renewable energy technologies and electricity from renewable energy sources, such as solar, wind, geothermal, and biomass. Building on the President's commitment to install 20,000 Federal solar energy systems by 2010, the Order calls for new investments in renewable energy through applications of solar, wind, geothermal, and biomass technologies at Federal facilities and through the purchase of electricity from renewable energy sources.
• Water Conservation. The Order calls for Federal agencies to improve their water efficiency, not only to reduce water consumption, but also to reduce associated energy use. The Order requires the Department of Energy (DOE) to work with other Federal agencies to develop water consumption baselines and then set appropriate goals for water conservation.

Fewer Exempt Facilities. Under current practice, a large number of facilities (accounting for 17% of building energy use) are exempt from meeting Federal energy goals. Under this Order, all facilities are subject to these goals and requirements unless they meet new exemption criteria to be developed by DOE. In addition, in their Annual Report to the President, each agency must report all exempt facilities and explain the rationale for excluding them from Federal energy goals.

Cutting-Edge Tools and Strategies

The Order calls for agencies to use a wide range of energy management tools and strategies to fulfill the new energy efficiency, renewable energy, and greenhouse gas reduction goals.

• Alternative Financing. Financing options, like Energy Savings Performance Contracts (ESPCs) and utility energy efficiency service contracts, offer Federal agencies a powerful tool for leveraging private sector financing to fund cost-saving energy improvements at no net cost to taxpayers. Under ESPCs, private sector energy service companies finance the up-front cost of purchasing and installing new energy efficient equipment. The Federal government uses a portion of the savings it accrues through reduced energy bills to repay the energy service company over the life of the contract. Contractors then receive a predetermined share of the value of the energy savings generated by their efforts, and may be paid only if actual savings result from the reduced energy use. All additional savings accrue to the government. The government benefits from new equipment, reduced energy costs, improved energy efficiency, reduced greenhouse gas emissions, and conservation of nonrenewable fuels.

To date, DOE and the Department of Defense (DOD) have put into place over $8 billion in ESPC contract authority -- available for all Federal agencies to fund energy improvements. In addition, many of these contracts are "Super ESPCs" which rely on the same principles as regular ESPCs but offer an umbrella contract to allow expedited service. The Order calls for agencies to maximize their use of ESPCs and utility energy efficiency service contracts to realize energy and cost savings.

• Life-Cycle Cost Analysis. It is critical that Federal agencies consider the full cost of their investments, including energy, operation and maintenance costs, not simply the purchase cost of projects or products. By taking all costs into account, agencies can save money and energy. To that end, the Order requires agencies to consider life-cycle costs - that is, investment costs, capital costs, installation costs, energy costs, operating costs, maintenance costs, and disposal costs, over the life of the project or product.
• ENERGY STAR (Registered Trademark) and Other Energy Efficient Products. The Order calls for agencies to purchase ENERGY STAR (Registered Trademark) and other energy efficient products. These products, ranging from compact fluorescent light bulbs to highly efficient boilers, can save Federal agencies hundreds of millions of dollars.

Electricity from Renewable Energy and Energy Efficient Sources. Given that over 70% of the Federal government's energy costs in buildings comes from electricity, the Order requires agencies to consider the source of their electricity and opt for cleaner, more efficient electricity generation. Specifically, the Order calls for agencies to minimize the greenhouse gas intensity of purchased electricity. In addition, agencies should adopt policies to increase the use of electricity from renewable energy sources.

• Highly Efficient Energy Systems. This Order calls for agencies to make greater use of highly efficient energy systems, including combined heat and power systems that use "waste" heat from industrial processes to supply power to other needs. These types of systems can offer not only tremendous energy and cost savings, but also significant environmental benefits.
• Off-Grid Electricity Generation. This Order requires agencies to consider off-grid electricity opportunities that often provide energy and environmental benefits, while allowing agencies to avoid the costs of building new transmission lines or digging up existing lines. Off-grid options can be particularly effective in remote locations, including in our National Parks. The systems range from solar outdoor lighting to small wind turbines and fuel cells.
• Sustainable Building Design. In July 1998, as part of the President's radio address on Federal energy issues, a number of Federal agencies committed to constructing sustainably-designed buildings. This Order requires all Federal agencies to apply sustainable design principles to the siting, design, and construction of new facilities and thereby save energy, save taxpayer dollars, and reduce pollution.

Strengthening Agency Accountability

The Order provides a framework to hold agencies accountable for their progress in Federal energy management. The following new management strategies and reporting requirements will help ensure that all Federal agencies manage energy use wisely, reaping substantial fiscal and environmental benefits for years to come.

• Annual Reports to the President and Annual Score Cards. Under the Order, each Federal agency must submit an Annual Report to the President describing its progress in meeting the goals of the Order. In addition, the Deputy Director for Management of the Office of Management Budget will evaluate each agency's performance and submit agency score cards to the President. The score card evaluations will consider agencies' progress toward the energy efficiency, renewable energy, and greenhouse gas goals. The score cards will also take into account how effectively agencies have used key energy management tools and strategies.
• President's Management Council. The President's Management Council, which generally consists of Deputy Secretaries from all agencies, will monitor agencies' progress on Federal energy management and provide a high-level forum for identifying ways to accelerate improvements.
• Agency Energy Teams. Each agency must form a technical energy support team within 90 days to ensure that energy management strategies are implemented across all facilities. These energy teams will bring together legal, procurement, and other essential agency representatives to overcome barriers to realizing energy and cost savings.
• New Public/Private Advisory Committee. The Order calls for DOE to organize an advisory committee to bring together private and public sector experts who can advise agencies on how to improve their energy management practices. The Committee will include representatives from energy service companies, utility companies, equipment manufacturers, and other private, non-profit, and public sector organizations that focus on energy issues.

Concrete Steps, Concrete Savings

In conjunction with the signing of a new Executive Order to promote energy efficiency, President Clinton announced today the Pentagon's intent to award (by the end of June) the Federal government's largest-ever Energy Saving Performance Contract (ESPC), under which Viron Energy Services/Pepco Energy Services will upgrade the energy performance of 837 Federal buildings at no up-front cost to taxpayers. The 18-year service contract, covering five military installations in the Washington, DC area, will reduce annual energy consumption by 17%, saving DOD over $219 million in energy and related costs and reducing annual greenhouse gas emissions by 24,000 metric tons of carbon (MTC) - equivalent to taking over 19,000 cars off the road.

Other examples of energy-saving actions of the kind the President's Order is designed to promote include:

• Energy Efficient Procurement. The Defense Logistics Agency (DLA), which supplies almost 20% of all light bulbs purchased by the Federal government, has teamed up with DOE to offer half price compact florescent light bulbs to any Federal purchaser with a maximum purchase of 400 bulbs per order.

Last year, the DLA supplied 1.5 million bulbs to Federal purchasers. If they had all been compact florescents savings would have totaled $7.5 million. Just last week DOE added compact florescents to the ENERGY STAR product rating program providing consumers with specifications for the purchase of such bulbs. A compact florescent bulb can last up to five years, saving $67 over the its lifetime.

• Renewable Energy Projects. Some 18 Federal agencies - from the Departments of Agriculture, Interior, and Transportation to the Smithsonian Institution and the U.S. Postal Service - will soon receive a combined $1.5 million in DOE funding for more than 100 cost-effective renewable energy projects at government sites. The technologies include more than 50 new or renovated solar water heating systems, large and small photovoltaic systems, PV-powered lights and "solar walls" which preheat outside air for building heating, and wind power.
• Buying Renewable Power. The Environmental Protection Agency's Richmond, California laboratory has become the first major Federal facility supplied 100% with renewable energy. Initially, 60% of the power supplied will come from geothermal sources and 40% will come from biomass. Eventually power will be supplied by a new landfill gas facility expected to begin service in the fall of 1999. The General Service Administration (GSA) and DOE provided support to EPA in this effort. This green power purchase will produce environmental benefits equivalent to reducing over 2 million passenger car miles driven in California each year.
• Energy Star Buildings. GSA's Foley Square Federal Office Building in New York City has been retrofitted to achieve the ENERGY STAR (Registered Trademark) Building Label by EPA. The ENERGY STAR (Registered Trademark] Building Label signifies that the building is in the top 25% of similar buildings with regard to energy efficiency. Opened in 1994, the building encompasses 1.2 million square feet and houses offices of the Federal Bureau of Investigation, the Internal Revenue Service and the Environmental Protection Agency. By deploying equipment and products that qualify the building for the ENERGY STAR (Registered Trademark) label, Foley Square saves taxpayers $1.3 million annually in energy costs.

Prior Federal Energy Efficiency Efforts

Today's Order builds upon previous efforts to improve Federal energy efficiency. The Energy Policy Act of 1992 established a goal of improving energy efficiency in Federal office buildings by 20% on an energy-per-square-foot basis by the year 2000, compared to a baseline year of 1985. In March of 1994, President Clinton issued Executive Order 12902, which extended the energy-efficiency goal to 30% below 1985 by 2005. Today's Order extends these goals still further, while also tightening provisions on exempted facilities and setting forth the first-ever Federal goal tied specifically to greenhouse gas reductions.

            DOD-Viron/Pepco Energy Saving Performance Contract
                               June 3, 1999

In conjunction with the signing of a new Executive Order to promote energy efficiency, President Clinton will announce today the Pentagon's intent to award (by the end of June) the Federal government's largest-ever Energy Saving Performance Contract (ESPC), under which Viron Energy Services/Pepco Energy Services (Viron/Pepco) will upgrade the energy performance of 837 Federal buildings at no up-front cost to taxpayers. The 18-year service contract, covering five military installations in the Washington, DC area, will reduce annual energy consumption by 17%, saving the Department of Defense (DOD) over $219 million in energy and related costs and reducing annual greenhouse gas emissions by 24,000 metric tons of carbon (MTC) - equivalent of taking over 19,000 cars off the road.

Energy Saving Performance Contracts -- Energy Savings at No Up-front Cost to Taxpayers

The new Executive Order directs Federal agencies to maximize their use of ESPCs -- innovative financing mechanisms that mobilize private sector investment and expertise to save energy and save money in Federal facilities. Under ESPC authority, Federal agencies hire private energy service companies to conduct energy audits of facilities, propose energy saving retrofits, and privately finance, install, and maintain retrofits. There are no up-front payments by the government and contractors are paid from a share of the savings, with the remaining savings accruing to the agency.

The DOD-Viron/Pepco ESPC is the largest by far of any ever awarded by the Federal government and serves as a model for other agencies to replicate in implementing the President's new Executive Order.

Real Savings and Real Environmental Benefits

Under the new contract, some $70 million in private investment will fund energy upgrades at five installations in the Army's Military District of Washington - Ft. Belvoir, Ft. A.P. Hill, Ft. Meyer, Ft. McNair, and Ft. Meade. These measures will save money and improve the environment. In particular, they will:

• Avoid almost 24,000 MTC of greenhouse gas emissions annually -- a 26% reduction;
• Save DOD a total of over $219 million in energy and related costs
• Reduce annual energy costs by 17%;
• Reduce annual electricity use by 89 million kilowatt hours (kWh) of energy annually;
• Reduce fuel use by 294,000 million British Thermal Units (MMBTUs) annually;
• Reduce pollutants that cause smog and acid rain by more than 600 metric tons annually; and,
• Save over 50 million gallons of water annually.

These improvements to buildings and equipment will support Army operations well into the next century, without the need for additional funding, and will provide more comfortable living conditions and improved quality of life for those who live and work at the five installations.

Energy Efficiency Measures to be Taken

Expected energy efficiency measures include:

• Cooling system retrofits. Some 888 cooling units will be replaced or retrofitted, cutting energy use in 343 buildings, reducing associated energy costs by over $1 million annually and annual greenhouse gas emissions by 4,900 MTC.
• Air Handling Units. Replacement and retrofitting of air handling units in 126 buildings will reduce annual energy consumption by 14 million kWh. This will mean annual savings of $742,000 and 3,500 MTC of greenhouse gas emissions avoided each year.
• Lighting Retrofits or Replacement. Some 142,600 light fixtures will be replaced or retrofitted in 714 buildings, reducing annual energy consumption by 29.8 million kWh, saving $1.4 million annually, and reducing annual greenhouse gas emissions by 4,800 MTC.
• Central Heating Plant Upgrade. Two central steam plants will be replaced with new gas fired boilers, reducing annual fuel use by 138,000 MMBTU, saving $655,000 annually, and reducing annual greenhouse gas emissions by 2,900 MTC.
• Central Cooling Plant Upgrade. A new absorption chiller and chilled water distribution line will be installed at one site, reducing annual electricity use by approximately 270,000 kWh and saving $21,000 annually.
• Water Conservation. Water consumption and waste water will be reduced in 213 buildings through replacement of existing plumbing equipment with ultra low-flow units, saving approximately 50.5 million of gallons annually, or $195,000.

DOD's Partnership With Viron/Pepco

With the assistance of the Department of Energy's (DOE's) National Renewable Energy Lab, DOD sought bids from private sector experts to provide solutions to the energy needs of the Military District of Washington. After a competitive bid process, DOD's Defense Energy Support Center has decided to award a contract to Viron/Pepco to provide a range of services including energy engineering, equipment installation, construction supervision, and measurement and verification. Under the contract, all capital investments will be made within the first three years of the contract and Viron/Pepco will be paid from a share of the verified energy savings resulting directly from its conservation measures.

More than 2,100 buildings on the five installations were surveyed for possible energy improvements. Under the contract, almost 40% of the buildings currently in use will benefit from one or more of the slated improvements and upgrades in the initial task order. The contract is also structured so that either the government or Viron/Pepco can suggest additional conservation measures for the remaining buildings.

Administration Efforts to Expand ESPC Use

While ESPC authority has existed since 1992, President Clinton has taken significant steps to streamline and promote greater use of this tool. Streamlined contracts -- known as "Super ESPCs" -- put in place by DOE and DOD have accelerated large investments in energy projects at hundreds of Federal facilities. Super ESPCs allow all agencies and facilities to place delivery orders under umbrella contracts, substantially reducing the lead time to contract with an energy services company. There are two types of Super ESPCs: regional and technology specific. Regional specific contracts cover a designated geographic area; technology specific contracts are in effect nationwide for a particular emerging technology, such as solar collectors.

In the last year, DOE has provided over $5 billion in ESPC contracting authority to 44 private contractors to perform energy and cost saving work. Projects have been designed and awarded that will mobilize $28.7 million of private investment to perform energy saving work in Federal agencies. The contractors will be paid from the $62.5 million projected savings. Well over a hundred agreements are currently under negotiation as this alternative financing tool for energy and taxpayer savings becomes more commonly used by Federal agencies. Other agreements are also under negotiation with utility contractors and under the DOD contracts (worth over $3 billion) which are also available for use by the rest of the Federal government.

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