August 08, 2007
The White House is pressing agencies to team up with industry to meet aggressive energy-savings goals.
The challenge for agencies is to make energy-efficient improvements when they don’t have the budgets to pay for such investments. The Bush administration is directing them to substantially increase their use of contracts that allow for private financing of such upgrades.
Under so-called share-in-savings contracts, agencies can enter into long-term contracts with private-sector energy or utility companies to improve the efficiency of heating and cooling systems, lighting, water supplies and other assets. Companies pay for the improvements upfront, then recover their costs by keeping a percentage of the energy savings that result from the improvements. Agencies retain all of the subsequent savings once the company has fully recovered its costs.
The idea is to help agencies meet goals under the 2005 Energy Policy Act and a January executive order by President Bush: Agencies must cut overall energy use by 30 percent by October 2015, increase the proportion of renewable energy used to at least 7.5 percent by October 2012 and cut water consumption by 16 percent by October 2015. To meet these goals, agencies must make energy-efficiency investments equal to 20 percent of their annual energy costs, according to White House estimates.
Agencies spent $14.5 billion to power buildings, vehicles and equipment in fiscal 2005, according to the latest Energy Department statistics. Based on this total, energy-efficiency investments would equal $2.9 billion annually.
Agencies won’t get the direct appropriations they need to make this level of investment, said Edwin Piñero, the White House’s federal environmental executive. “There just isn’t enough appropriations money to cover all of the energy investments we need to make,” he said.
In an Aug. 3 memo to agency heads, chief White House environmental adviser James Connaughton said so-called Energy Savings Performance Contracts and Utility Energy Service Contracts should account for at least half of the 20 percent investment in energy savings projects that each agency must make to achieve the energy savings goals outlined in the legislation and executive order.
Specific targets for energy-efficiency investments and the percentage of investments to be made through share-in-savings energy contracts will be established by the Energy Department for each agency based on each agency’s size and current use of such contracts, said Connaughton, who is chairman of the White House Council on Environmental Quality. He gave agencies until Sept. 17, 45 days from the Aug. 3 memo, to provide the department with an initial assessment of how they could use the special contracts.
“Agencies are all over the board with this. This 45-day period is going to be very telling as to where are we really with this and where could we really be,” Piñero said.
