Renewing energy efficiency commitment makes sense

In December 2011, the Obama Administration set an aggressive two-year goal to complete $2 billion worth of performance contracting projects at federal facilities. This White House initiative on Energy Savings Performance Contracting has leveraged over a billion dollars in private sector investment, created jobs and cut energy consumption dramatically at federal facilities nationwide.

Over the last two years, this initiative, backed by bipartisan and bicameral support in Congress, has helped make U.S. government buildings, military bases and federal laboratories more energy efficient by using private sector financing and expertise.  The Department of Energy estimates that between 2009 and 2011 almost $1 billion was leveraged to save more than $3.5 billion in energy and water costs.  According to a report by the National Association of Manufacturers, the presidential initiative has been an unqualified success.  Twenty-three different agencies have helped identify 205 projects with an estimated $2.4 billion of private sector investment value and potential net savings to the federal government of over $2 billion. 

{mosads}As stated in both a Senate and a House letter to the President signed by 145 lawmakers, the dawn of 2014 should not spell an end to this incredibly successful initiative. This is smart policy and the momentum should be continued. Opportunities abound to achieve further savings which could result in the addition of tens of thousands of new jobs. Federal agencies have already identified more than $9 billion in additional energy savings with only half of the facilities evaluated so far. By using these performance-based contracts, taxpayer dollars are not necessary upfront. Rather, the private sector finances the costs of the retrofits and guarantees the results with the upfront investment repaid by the government with the savings earned from lower energy costs over time.

The Obama administration announced on December 2 the intention to extend and expand this important initiative and we look forward to working with them so that they commit to an additional $1 billion in private sector investments contracts for each of the next five years. This new goal has already received the endorsement of a significant bipartisan coalition in Congress as well as the private industry that would support the contracts.

These projects are cutting down consumption at a critical time – energy costs are trending up and resources are limited.  Additionally, they contribute significantly to U.S. economic growth by creating good paying jobs to carry out these projects.  Some recent examples include:

• A military base at which retrofits, included lighting upgrades, integrated building controls and other projects will help save $2.4 million in energy costs annually.
• Another military facility, where a project to overhaul its heating and water systems is expected to deliver $170 million in savings over 20 years.
• A domestic agency site where high-efficiency lighting, improved energy distribution, and a geothermal system will reduce energy use by 35 percent and save $28 million in energy costs over 15 years.

These new jobs, in construction, manufacturing, engineering and suppliers, directly contribute to the growth of the U.S. economy because they cannot be outsourced. It’s estimated that a typical $10 million of performance contracting creates about 100 of these jobs.

At a time when there is inadequate bipartisan spirit and action around Washington, this program is an excellent example of the benefits that can be realized through cooperation among the Administration, Congress, Federal agencies and the private sector.  The initiative was launched with strong bipartisan and industry support. That healthy bipartisan coalition has not wavered.

145 members of the House of Representatives and the Senate earlier this month encouraged the president to extend this initiative – with 55 Republicans and 90 Democrats on board. It also has the endorsement of the U.S. Chamber of Commerce, the National Association of Manufacturers and The American Council for an Energy-Efficient Economy.

That support extends to the industry which has been working hard to develop the innovation and technology behind these energy efficiency efforts. Ameresco, Constellation, Chevron Energy Solutions, Honeywell, Johnson Controls, Lockheed Martin, Noresco, Schneider Electric, Siemens Government Technologies and Trane all back this initiative and are ready to step forward again.

While many in Washington lament the lack of a clear solution for many of our country’s issues, this initiative is as close to one as you can get.  ESPCs are a force multiplier for the federal government and should be leveraged as a means to provide immediate project capital and long-term guaranteed savings.  Agencies are facing difficult choices when it comes to maintaining their facilities and fulfilling their agency missions.  Energy savings performance contracts allow them to do both by saving energy and taxpayer dollars without upfront government funding necessary– something everyone in Washington can and should agree is in the best interest of the future of our country. 

Myers is president of Johnson Controls Building Efficiency; Orzeske is president of Honeywell Building Solutions; Regnery is president of Commercial HVAC North America and EMEA Strategic Business Unit, Trane/Ingersoll Rand; Vernerey is president and CEO of Schneider Electric North America; Armijo is vice president of Energy Solutions, Lockheed Martin; Derrington is executive vice president of Ameresco; and Humpton is senior vice president of Siemens Government Technologies. The seven are members of the Federal Performance Contracting Coalition, which represents energy service companies approved to work with the federal government to improve the energy efficiency of our federal facilities.