What’s Ahead for Energy Star?

With the fiscal year ending on Sept. 30 and the 2018 midterm elections on the horizon, the popular EPA program might be back on the chopping block.

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Jon Moeller, CEO of MACH Energy

Although the EPA managed to avoid budget cuts that saved ENERGY STAR from extinction, don’t expect a collective sigh of relief. With the fiscal year ending on September 30th and the upcoming House elections, ENERGY STAR might be back on the chopping block in 2018. In fact, the proposed new budget does not offer any compromise, and a 31 percent cut in EPA including the ENERGY STAR program is near the top of the list.

To those who do not work in real estate or with buildings, it might come as a surprise that ENERGY STAR is much more than just a consumer appliance resource. In 2000, the program developed an energy performance rating system for commercial buildings and facilities, providing a means to benchmark the energy performance of similar buildings with its free online Portfolio Manager tool. Recent interest in curbing energy consumption and reducing energy costs has generated building energy performance policies at the local and state level; more than 20 cities nationwide have mandates that require benchmarking with ENERGY STAR Portfolio Manager, where each building receives an ENERGY STAR score indicating its potential and current capacity in energy savings and efficiency.

But what does all this mean for building professionals? Over the years, MACH Energy has found most industry participants are ROI-driven, and we can apply this perspective towards understanding the situation.

Cost savings

In 2015 alone, commercial buildings utilizing the ENERGY STAR program generated more than $3.4B of the $34B cumulative savings, a substantial return compared to its $50 million budget. Business-oriented groups such as BOMA and other real estate investment companies have all publicly expressed their support of ENERGY STAR. 

Job creation and economic growth

The creation of 2.2 million jobs has been associated with the ENERGY STAR program through certification, retrofits, etc. Additionally, the San Francisco economy increased while energy usage decreased after mandatory building energy benchmarking.

Promoting economic investment from value creation

Studies have shown that the ENERGY STAR program for commercial buildings, especially the more efficient and “smart” properties improve the U.S. economy through higher tenant productivity, lower turnover rates and higher rent and valuations. We here at MACH have observed a rise in energy, sustainability and building professionals interested in managing their buildings and facilities with our technology. In fact, according to MACH’s industry survey reports, a net 14 percent more surveyed building professionals adopted energy management software in 2016 than in 2015.

Attracting capital

Investors are increasingly seeing participation in and certification of ENERGY STAR as a metric or standard of high quality building management. In some cases, ENERGY STAR can help owners qualify for better financing terms.

Energy independence

The movement towards energy independence (as evidenced by the page recently added to EPA website) is supported by ENERGY STAR in multiple ways—for example, in 2014, the EPA estimated that the program reduced 5 percent of total electric use.

ENERGY STAR’s precarious future naturally leads us to consider potential hypothetical outcomes. One such possibility could be a departmental transfer from the EPA to the DOE, which previously held a larger role in managing the program and already maintains federal minimum standards for certain appliances. And while ENERGY STAR is a highly regarded consumer label, its reputation of trustworthiness and reliability may be questioned should it come under the management of a private industry group. Perhaps a third-party real estate organization like the USGBC, BOMA, GRESB, or ULI Greenprint may be suitable candidates, as similar benchmarking tools are already underway, though none are as comprehensive or widely adopted as ENERGY STAR.

While no one knows if ENERGY STAR will go the way of the woolly mammoth, public interest and growing support from local and state initiatives makes us confident that saving money and improving efficiency are here to stay.

Jon Moeller is CEO of MACH Energy, a provider of cloud-based energy management software, where he also heads sales and corporate development. Prior to joining MACH, Moeller spent a decade in financial services business development and transactional roles at Banc of America Securities, Cowen and Co., and Storage Technology Corporation. Moeller is also currently president of a mixed-use project based in San Francisco, and an active member of ULI San Francisco’s Sustainability Committee.