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Daily News

EPA Sets Record Straight About Most Recent OIG Report
Nov 4, 2010
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Another U.S. Environmental Protection Agency (EPA) Office of Inspector General (OIG) report has been issued, but the EPA wants the world to know that the new report is only a summary of three earlier audits – it doesn't take into account all the improvements the EPA had made to the Energy Star certification process in the last 18 months.

The new OIG report does, however, make two new recommendations, based on its earlier findings, for improving the Energy Star program.  The EPA issued detailed responses to these recommendations.

The OIG, in its 2006 audit, found big problems with the way the EPA was approving products for the Energy Star program – the EPA was essentially allowing companies to self-certify and had no comprehensive program for verifying that products bearing the Energy Star label actually met Energy Star specifications.

Follow-up investigations and reports from the OIG accused the EPA of taking no action to address the problems. An embarrassed EPA finally did get to work to clean up the Energy Star certification process and implemented several recommendations from the OIG reports. The latest OIG report, the EPA pointed out, does not attempt to assess the improvements currently underway to strengthen Energy Star.

An EPA statement detailed those steps:
  • Keeping Energy Star relevant by updating requirements across all product categories.
  • Requiring products get third party certification of efficiency claims from an EPA Recognized Certification Body (CB). This certification program was finalized for all 60 product categories on October 26, 2010.
  • Strengthening an "already extensive infrastructure of controls, audits, and other measures to ensure that the Energy Star name and logo are applied properly and consistently in the marketplace."
The new recommendations from the OIG for improving the program: 1, develop a strategic vision to assure that the Energy Star label represents superior energy conservation performance; and 2, develop a set of goals and measures to accurately assess benefits.

The complete text of the OIG recommendations and the EPA responses are below.

RECOMMENDATION 1:
Develop a strategic vision that assures that the ENERGY STAR label represents superior energy conservation performance consistent with the intent of the Energy Policy Act of 2005.

EPA Response:

The goal of the ENERGY STAR program is to identify and promote energy efficient products that meet the highest energy conservation standards and drives the greatest greenhouse gas savings. To do this, EPA applies a set of principles when implementing the program.  These principles are consistent with this goal by virtue of the fact that they narrow the pool of eligible, highest-conserving products to those likely to enhance consumer acceptance and confidence in the program, thereby increasing overall reductions in energy consumption. They include

   1. Significant energy savings can be realized on a national basis
   2. Product performance can be maintained or enhanced with increased energy efficiency
   3. Purchasers will recover their investment in increased energy efficiency within a reasonable time
   4. Energy efficiency can be achieved with several technology options, at least one of which is non-proprietary.
   5. Product energy consumption and energy performance can be measured and verified with testing
   6. Labeling would effectively differentiate products and be visible for purchasers

Each time an ENERGY STAR performance standard is established, whether for the first time or as part of a revision, these principles are balanced to ensure that specified level will deliver significant aggregate energy savings while distinguishing products that are cost-effective to the consumer and do not compromise functionality or performance.  Considering these principles, identification and promotion of products with the highest energy conservation standards may result in setting an ENERGY STAR efficiency level so that the top 25% of models in terms of efficiency can meet it because this level offers the desired amount of selection and availability while also promising significant energy savings, cost-effective options and no compromise in performance.

EPA's recent actions (not evaluated as part of this report) further insure that the ENERGY STAR label will identify only those energy efficient products that offer meaningful energy savings (at an individual and/or national level) over those products typically purchased.

Furthermore, on September 30, 2009, as part of a new Memorandum of Understanding on the implementation of the ENERGY STAR Program, EPA and DOE agreed upon a strategic vision for the ENERGY STAR Products Program. As part of this agreement, the Agencies agreed that the ENERGY STAR label would continue to identify those energy efficient products that offer meaningful energy savings (at an individual and/or national level) over those products typically purchased. In addition,

ENERGY STAR specifications will be established which:

    * Overlay the consumer perspective and the need to consistently identify top performing products.
    * Recognize products that are cost-effective from the purchaser standpoint; offer at least equivalent functionality and features as standard products; and are proven and broadly available. Cost-effectiveness in terms of payback periods will be defined on a case-by-case basis, taking into account both the expected useful life of the product and the general desirability of shorter payback periods, but will in general be 3-5 years.
    * Identify top performing products - approximately the top 25% most efficient of models within a product class - under an ENERGY STAR specification at the time it becomes effective, with consideration of expected improvements in product efficiency and market penetration trends of those products that will take place between establishing a specification and the specification becoming effective.

RECOMMENDATION 2:
Develop a set of goals and valid and reliable measures that can accurately inform shareholders and the public of the benefits of the program.

EPA Response:

EPA has clear goals for the ENERGY STAR program and articulates the benefits of the program on an annual basis. For example, in 2008 the goal of the ENERGY STAR products program was to avoid the emissions of 19.4 million metric tons of carbon equivalent. To meet this goal, EPA balances energy efficiency potential, product performance and cost effectiveness as well as American consumers need for high quality products to set the level for ENERGY STAR. We do this consistently across 60 product categories so that consumer expectations are met and a greater environmental impact can be gained through significant greenhouse gas savings.

As the ENERGY STAR program grows, EPA is in the process of enhancing its approach to accounting for program savings.  An important aspect of this is a clearly defined market for key product areas. We continue to refine these market transformation estimates as data becomes available.

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