States and Cities Follow Federal Lead in Energy-Efficient Purchasing

November 11, 2003

FEMP's mission to "Lead by Example" is gaining headway in a very important market segment-state and local government. A growing number of jurisdictions have followed the federal government in adopting energy-efficient purchasing policies, often using the same ENERGY STAR® and FEMP criteria that federal agencies are required to use.

The State of Arizona and New York City are only two of the most recent additions to a growing list of states, cities, universities, and school districts that are choosing to "buy efficient," often as part of a broader policy to "buy green" (i.e., choose environmentally-preferable and recyclable products). According to the Consortium for Energy Efficiency (CEE), the 50 state governments and approximately 3,043 county, 19,279 city, and 16,656 town governments together spend an estimated $12 billion per year on energy bills and another $50 to $70 billion a year on energy-related products. The magnitude of this buying power can help jump-start a market transformation toward energy-efficient products.

When major buyers at all three levels of government use the same efficiency criteria to specify energy-efficient products, this sends a powerful market signal to manufacturers and vendors that some of their largest and most important customers are committed to buy high-efficiency products, and are looking for sellers who can offer the best prices and the best overall value for these efficient products.

In other words, aggregating buyer demand for energy-efficient products will stimulate competitors to respond. This, in turn, helps to lower prices and improve choices for all buyers of energy-efficient products, government and non-government alike. A recent report prepared for FEMP by DOE's Lawrence Berkeley National Laboratory (LBNL) suggested that federal, state, and local purchasing combined could save U.S. taxpayers about $1 billion per year in lower energy bills, simply by replacing standard, minimal-efficiency products with more efficient (ENERGY STAR® or FEMP-recommended) models. These annual savings can be realized, after 10 years of turnover, for the most part using funds that will be spent anyway, to replace equipment at the end of its useful life.

As many FEMP Focus readers are aware, both Executive Order 13123 and FAR (Part 23) direct federal agencies to buy ENERGY STAR® labeled products or (for categories where there is no ENERGY STAR® label) to choose FEMP-designated products that are among the 25 percent most energy-efficient on the market. A separate requirement, signed in 2001 by President Bush (EO 13221), calls on federal agencies to buy products that use up to 1 watt in standby (off) mode, or other low standby levels set by FEMP. Both Executive Orders provide for exceptions if there is no efficient product available to meet the agency's functional requirements, or if an efficient product would not be cost-effective for some specific application.

In Arizona, Governor Janet Napolitano signed a new law (HB 2324), sponsored by State Representative Randy Graf. The new law, enacted last April, sets goals for reducing overall energy use in state government and university buildings, similar to the federal building goals in the 1992 Energy Policy Act and subsequent Executive Orders. The Arizona law also requires new construction to be more energy-efficient, and mandates that:

"All state agencies shall procure energy efficient products that are ... ENERGY STAR® [labeled] or that are certified under the Federal Energy Management Program ... unless the products are shown not to be cost-effective on a life-cycle cost basis." (Arizona Statute, HB 2324)

According to Jim Westberg of the Arizona Department of Commerce Energy Office, "This new purchasing policy is really a great benefit to our state agencies, since we also have a goal of reducing energy use 10 percent by 2008. When the agencies start buying efficient models as part of their normal equipment replacement cycle, it will help them reach that goal." Taken together, these initiatives will save Arizona taxpayers about $90 million over a 12-year period, from now to 2015, according to estimates by the Southwest Energy Efficiency Project (SWEEP).

New York State is now implementing both an Executive Order and a state law requiring state agencies to buy energy-efficient products. Executive Order 111, signed by Governor Pataki during June 2001, calls for:

  • a 35 percent reduction in energy use by state buildings as of 2010 (using a 1990 base),

  • new buildings that meet LEED™ rating criteria and are at least 20 percent more efficient than New York Building Code requirements, and

  • purchase of ENERGY STAR® products or other efficient products as designated by the New York State Energy Research and Development Authority (NYSERDA).

In carrying out this purchasing mandate, NYSERDA has drawn heavily on the federal procurement criteria set by FEMP. Matt Brown, who heads NYSERDA's implementation of the Executive Order, observed that: "Many of the purchasing officials I've spoken to have always wanted to purchase equipment with higher standards; now the Executive Order gives them the guidance and the go-ahead to do it."

New York City recently enacted legislation that codifies its practice of energy-efficient purchasing, a practice dating from 1994. Local Law No. 30, signed into law by Mayor Michael R. Bloomberg on April 11, 2003, requires that energy-using products procured by the City of New York be ENERGY STAR® labeled, provided that there are at least six manufacturers that produce such ENERGY STAR® products.

In energy-efficient purchasing, the New York City (NYC) clearly leads by example. During FY 2002, NYC spent $90.8 million for ENERGY STAR® labeled products. Of this, more than three-fourths was for computers, monitors, and printers, with the rest spent on photocopiers, fax machines, televisions, VCRs, air conditioners, and lamps; and the total does not even include energy-efficient equipment installed as part of construction and renovation projects.

According to Jennifer Blum at the Department of Citywide Administrative Services (DCAS), NYC's primary purchasing agency for goods, "New York City firmly believes that in our role as a market participant we should promote the purchase of energy-efficient products." For several years, DCAS has provided training to other NYC agencies on energy-efficient and environmentally preferable purchasing. NYC procurement staff also believe that the online listing of ENERGY STAR® qualified products (www.energystar. gov/products) offers a valuable source of information to meet the requirements of the local law. The State of California Department of General Services issued a Management Memo on "Procurement of Energy Efficient Products" (Memo 0114, July 20, 2001) listing the FEMP product categories and directing that: "Where FEMP-recommended standards are available, all state agencies shall purchase only those products that meet the recommended standards. All products displaying the ENERGY STAR® label meet the FEMP standards. A purchase of an ENERGY STAR®-labeled product automatically complies with this directive."

DGS guidelines for major capital construction projects also require that equipment, appliances, and roofing systems purchased as part of new construction or renovation are ENERGY STAR® compliant. "California state government invests over $3.8 billion annually in design and construction," said Dan Burgoyne, Sustainability Manager at the CA Dept. of General Services. "California already has some of the most stringent energy codes in the country (Title 24), and the use of ENERGY STAR® products has helped state projects meet and sometimes exceed these stringent energy codes by up to 30 percent."

Meanwhile, the statewide University of California system already specifies ENERGY STAR® office equipment, and is considering ways to extend its energy-efficient purchasing into one of the fastest-growing areas of procurement: energy-using equipment in the Universities' many existing and new laboratory facilities. Energy use by lab equipment, also an important issue for many other universities, private firms, and federal agencies, will be explored at a special panel session at the upcoming Labs-21 Conference in Denver (October 2003), cosponsored by FEMP and the Environmental Protection Agency. Also in California, during July 2003 the San Diego Regional Energy Office conducted a workshop on Procuring Energy Efficiency Products for local government purchasing managers, engineers, architects, facility managers, and policymakers. The workshop featured case studies on energy-efficient purchasing by the cities of San Diego and Inglewood, as well as speakers describing the FEMP procurement and Energy Star® labeling programs.

In Wisconsin, the Department of Administration, Division of Energy works closely with other state agencies, the University of Wisconsin (UW), city governments, and local Public Housing Authorities to encourage widespread use of Energy Star® and FEMP efficiency criteria in government purchasing. Just this summer, staff at the Division of Energy noticed that the University System was about to issue a major solicitation for compact refrigerators for the dormitories. According to Barbara Smith of the Division of Energy, "Several of the manufacturers made Energy Star® compact refrigerator/freezers in the size needed, so the UW buying agent agreed with my suggestion to amend the bid specs to require ENERGY STAR®. Similarly, the Wisconsin Department of Revenue was so intrigued with the possibility of specifying high-efficiency light-emitting diodes (LED) lighted "LOTTERY" signs for use by small retail stores that they decided to revamp their bid specifications to mandate LEDs. Again according to Smith, "When the bids came in, the Department was very pleased with the price and performance." Local governments in Wisconsin have also made effective use of the statewide contract for high-efficiency LED traffic signals to negotiate attractive prices from local dealers.

Among the next targets are ENERGY STAR® refrigerators, clothes washers, and room air conditioners; the latter are purchased in volume (about 400 per year by UW-Madison alone) for dorm rooms used by summer conference attendees. Also, Smith thinks that the new FEMP and ENERGY STAR® criteria for efficient food service equipment will be very popular with universities and school districts alike. To cite a few more examples of the many other states and municipalities with energy-efficient purchasing policies:

  • The City of Seattle's "Lean and Green City" Copernicus Project for purchasing calls for office equipment to meet ENERGY STAR® requirements.

  • King County in Washington State has purchased 32 hybrid electric vehicles for the county government fleet, under a master contract issued by the State of Washington. The County reported that the purchase price for these hybrids, with twice the fuel economy of the average new car, was about the same as what they paid for conventional sedans.

  • The Commonwealth of Massachusetts has an Environmentally Preferable Products Procurement Program (EPP) that features ENERGY STAR® labeled appliances, air conditioners, and office equipment, as well as links to the FEMP and ENERGY STAR® Web sites.

  • Although last updated during 2000, the Consortium for Energy Efficiency Web site for State and Local Government Purchasing lists case studies, including: Portland, OR; San Antonio, TX; San Francisco, CA; St. Paul, MN; Hennepin and Ramsey Counties, MN; Bexar County and Harlandale School District, TX; Montgomery County, MD; University of California San Francisco; University of Washington-Seattle; and state governments in Idaho, Massachusetts, and Tennessee.

For more information please contact Alison Thomas, FEMP, Alison.Thomas@ee.doe.gov; or Jeffrey Harris, LBNL, JPHarris@lbl.gov.