Government Procurement

All governments are major energy users. Legislation or regulation to require purchase by federal, state, and/or municipal governments of clean energy products and processes can do much to promote cleaner and more affordable use of energy. Government procurements of green products also create markets to bring down their prices and set an example of the feasibility of their use for the private sector.

In the United States, the government is the world's largest single buyer of energy-using products, accounting for over $10 billion of such purchases each year.48 The U.S. government, through legislation and executive orders, has required that all U.S. federal agencies must use thirty percent less energy per square foot in their buildings in 2005 than they consumed in 1985 and thirty-five percent less in 2010. In implementing these requirements, the Federal Energy Management Program (FEMP) requires the use of energy efficient lights and appliances in all its buildings and has adopted strict energy efficiency requirements for the construction of its buildings.49 All federal agencies are required to purchase only products that qualify for the ENERGY STAR label, or, where there is no label, are among the twenty-five percent most efficient products on the market. Renewable resources must be acquired wherever cost effective.50

The program has saved the government agencies, and thus taxpayers, hundreds of millions of dollars in energy and pollution quantities and costs. The U.S. government also is including energy efficiency specifications in its contracting guide specifications used for construction and renovation projects. For example, by adopting efficiency criteria, the U.S. Navy in just one year (1998) saved an estimated $1.2 million per year in reduced electricity use by 500,000 efficient (T-8) fluorescent lamps, 200,000 electronic ballasts, and 20,000 light-emitting diode (LED) exit signs.51 And, as a part

46 Moore, supra note 9 at 4.

47 Los Angeles Daily News, L.A. leads way in developing true "Green Power" (June 2, 1999).

48 A. K. McCane and J. Harris, Changing Government Purchasing Practices: Promoting Energy Efficiency on a Budget, Proceedings of the ACEEE Summer Study (Asilomar, CA, 1996).

49 Executive Orders 13123 and 12902; see

51 See; An example of a state government agency efficiency success story: the Environmental Services Department (ESD)

of a massive renovation program, the Departments of Defense and Energy recently installed photovoltaic panels on the Pentagon.52

Government procurement programs of renewables involve payment of a premium up front, but result in very substantial long-term savings. Governments can also require the purchase for their vehicle fleets of clean and efficient vehicles. Many municipalities in the United States are now purchasing electric and natural gas turbine buses. The City of Los Angeles, California, has purchased a fleet of electric cars for municipal use and has installed recharging stations for the public throughout the city. California also adopted a law requiring "zero emission vehicles" and several other states have adopted the California standard.53

In the United States, city governments have been very aggressive about reducing their energy usage as a part of programs to decrease carbon dioxide emissions. Over 100 cities, representing ten percent of global emissions, have joined the Cities for Climate Protection program to reduce these emissions by investing in public transportation, building efficiency measures, planting trees, and installing solar collectors. Cities in other countries have taken similar action. Thus, Toronto, the first city to announce a climate plan, has undertaken to reduce its emissions by twenty percent. Saarbrucken in southern Germany has already cut its emissions by fifteen percent by measures including energy efficiency and public education.54

Similar efforts are being made in other countries. For example: Australia utilizes best practices in government procurement through performance contracting; Finland has adopted a target to reduce heating energy and electricity consumption in its government operations; Ireland has a program to reduce energy consumption in all state buildings; and the United Kingdom has a five-year program for reducing energy in government facilities. Canada, through a Federal Building Initiative, has been successful in achieving energy savings by contracting with ESCOs.55

A program sponsored by the Danish Electricity Savings Trust builds energy savings around a labeling requirement. The Trust organized a group of large institutional buyers, including housing companies and local governments, to jointly procure at a very favorable bulk-purchase price up to 10,000 energy efficient refrigerators that qualify for the top European Union efficiency label rating.56

Government procurement actions to stimulate development of improved energy efficient technology can also include the conduct of competitions to produce equipment with superior energy savings. A successful example was the U.S. government's of San Diego decreased its energy consumption by 70% when energy efficient measures were implemented in its office building. The 73,000-sq.-ft. building received a new high-efficiency heating, ventilation, and air conditioning (HVAC) system; high-efficiency window films; fluorescent lamps and fixtures; and daylight and occupancy sensors. These improvements helped the building surpass California's Title 24 building code by more than 50%. Actual savings for ESD have been approximately $80,000 per year ($1.10/square foot). The building went from operating at 21-22kWh/square foot to 7-8kWh/square foot. J. Romm, Cool Companies, Island Press (Washington, DC, 1999).

52 FEMP Focus, U.S. Department of Energy (September/October 1999).

53 See

54 C. Flavin, Last Tango in Buenos Aires, Worldwatch, vol. 11, No. 6, Worldwatch Institute (Washington, DC, November/December 1998), at 17.

55 See

56 P. Karbo, Denmark Launches a Procurement Programme, and Danish Procurement Pays Dividends, Appliance Efficiency Newsletter of the International Network for Domestic Energy-Efficient Appliances, 3:2 and 3:3 (Stockholm, 1999).

"Golden Carrot" Super-Efficient Refrigerator Program under which a consortium of government, utilities, andNGOs organized a competition to award a total of $30 million to the manufacturer offering the best new refrigerator that exceeded prevailing efficiency standards by at least thirty percent. The goal was met and many participating utilities also offered additional consumer rebates for it.57 Sweden has a similar, very ingenious program under which purchasing offices issue requests for proposals guaranteeing to buy a large number of devices at specified prices if they meet technical standards for energy efficiency and customer savings.58

Governments also can aggregate procurements to make the production of energy superior equipment economic for manufacturers. Technology procurement for energy efficient products, pioneered in Sweden, subsequently has been used in the United States, The Netherlands, and Finland. Sweden's initial effort recruited housing cooperatives for a 1992 procurement creating a market for super-efficient windows that saved sixty percent more energy than standard Swedish triple-glazed windows. In 1995, the New York Power Authority and the New York City Housing Authority created a technology procurement project for new refrigerators that used thirty percent less electricity than those then on the market. And the IEA has sponsored a number of technology procurement projects for electric motors, heat pump dryers, LED traffic signals, and digital multifunction office copiers.59

The U.S. government has a Reporting of Greenhouse Gas Program through which energy efficiency and renewable measures are incentivized.60 Under this program U.S. companies and organizations must report to the Energy Information Agency their programs and achievements in reducing greenhouse gas emissions. This program is useful in allowing companies to obtain recognition for their accomplishments and to establish a record of what they have done for eventual crediting against U.S. emission reduction requirements under the Kyoto Protocol.

Negotiating Essentials

Negotiating Essentials

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