oversight

Federal Energy Management: Facility and Vehicle Energy Efficiency Issues

Published by the Government Accountability Office on 2003-03-12.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                        United States General Accounting Office

GAO                     Testimony
                        Before the Committee on Government
                        Reform, House of Representatives


Not to Be Released
Before 10:00 a.m. EST
Wednesday,
March 12, 2003
                        FEDERAL ENERGY
                        MANAGEMENT
                        Facility and Vehicle Energy
                        Efficiency Issues

                        Statement for the Record by Bernard L. Ungar, Director,
                        Physical Infrastructure Issues
                        James E. Wells, Director, Natural Resources and
                        Environment Issues




GAO-03-545T
          Mr. Chairman and Members of the Committee:

          We welcome the opportunity to provide testimony on energy conservation
          efforts in federal facilities and agencies’ use of alternative fuel vehicles.
          According to the Department of Energy (DOE), the federal government’s
          energy bills total approximately $4 billion annually. Our testimony
          provides an overview of the vast federal facilities inventory, describes
          laws and other authorities that pertain to energy conservation in facilities
          and use of alternative fuel vehicles, highlights some of the key federal
          efforts to promote energy efficient practices and building designs,
          describes some things that can be done to improve energy efficiency in
          facilities and related cost implications, and identifies some of the
          obstacles agencies face in improving energy efficiency in federal facilities.
          Our testimony also provides an update on agencies’ use of alternative fuel
          vehicles and is based on prior reports and ongoing work.

          Constructing and operating buildings requires enormous amounts of
          energy, water, and materials and creates large amounts of waste. How
          agencies manage their facilities, along with the vehicles they use to
          accomplish their missions, has significant cost implications and greatly
          affects the environment. According to DOE, energy management is one of
          the most challenging tasks facing today’s federal facilities manager, and
          sound energy management includes using energy efficiently, ensuring
          reliable supplies, and reducing costs whenever possible. The federal role
          in energy conservation was also highlighted in the President’s National
          Energy Policy, in which the President directed heads of executive
          departments and agencies to “take appropriate actions to conserve energy
          use at their facilities to the maximum extent consistent with the effective
          discharge of public responsibilities.”


          With approximately 3.3 billion feet of facility space and over one-half
Summary   million automobiles, the federal government is the largest single energy
          consumer in the nation. Various laws, regulations, and executive
          memorandums direct federal facility managers to reduce energy
          consumption and environmental impacts of the buildings they manage.
          Agencies also must follow other requirements for the acquisition and use
          of alternative fuel vehicles, which use fuels like methanol, propane, and
          natural gas, to name a few. In constructing and renovating facilities,
          agencies have begun using “green” design approaches, which are intended
          to result in energy efficiency and minimal impact on the environment.
          Such approaches have been used at the White House, Pentagon, and the
          Zion National Park Visitor Center. Despite the possible benefits, some

          Page 1                                                           GAO-03-545T
                        agencies believe they face obstacles in employing green practices in
                        construction and renovation projects. These include key stakeholders—
                        architects, engineers, agency staff—who are not familiar with green
                        approaches, higher initial costs of green projects, difficulty getting agency
                        management buy-in, and difficulty quantifying the benefits of green facility
                        designs. In addition to efforts to make federal facilities more energy
                        efficient, the federal government has also attempted to reduce the nation’s
                        consumption of petroleum fuels in transportation through the use of
                        alternative fuel vehicles in the federal vehicle fleet.


                        The federal facilities inventory contains a diverse portfolio of assets that
Overview of Federal     are used for a wide variety of missions. According to the fiscal year 2001
Facilities, Vehicles,   financial statements of the U.S. government, the federal government’s real
                        property assets—including land— are worth about $328 billion. In terms of
and Related Energy      facilities, the latest available governmentwide data from GSA indicated
Efficiency              that as of September 30, 2000, the federal government owned and leased
                        approximately 3.3 billion square feet of building floor area worldwide.1 As
Requirements            shown in figure 1, the Department of Defense (DOD), U.S. Postal Service
                        (USPS), General Services Administration (GSA), and Department of
                        Veterans Affairs (VA) hold the majority of the owned facility space. Figure
                        1 also shows that DOD, the Department of State (State), GSA, and USPS
                        lease the most space.




                        1
                         U.S. General Services Administration, Summary Report of Real Property Owned by the
                        United States Throughout the World (Washington, D.C.: June 2001); U.S. General Services
                        Administration, Summary Report of Real Property Leased by the United States Throughout
                        the World (Washington, D.C.: June 2001). We have reported that the governmentwide real
                        property data that GSA compiles—often referred to as the worldwide inventory—have
                        been unreliable and of limited usefulness. However, these data provide the only available
                        indication of the size and characteristics of the federal real property inventory. For more
                        information, see U.S. General Accounting Office, Federal Real Property: Better
                        Governmentwide Data Needed for Strategic Decisionmaking, GAO-02-342 (Washington,
                        D.C.: Apr. 16, 2002).




                        Page 2                                                                       GAO-03-545T
Figure 1: Percentages of Federal Facility Space Owned and Leased Worldwide, by Agency




                                       A set of federal laws, regulations, executive orders, and executive
                                       memorandums direct federal facility managers to reduce the energy and
                                       environmental impacts of the buildings they manage. In enacting the
                                       Federal Energy Management Improvement Act of 1988 (FEMIA),2
                                       Congress recognized, among other things, that the federal government is
                                       the largest single energy consumer in the nation, and that the cost of
                                       meeting the federal government’s energy requirements is substantial. The
                                       purpose of FEMIA, as amended, is “to promote the conservation and the
                                       efficient use of energy and water and the use of renewable energy sources
                                       by the federal government.”3 FEMIA, as amended, sets forth energy


                                       2
                                        Pub. L. No. 100-615, 102 Stat. 3185 (1988).
                                       3
                                        42 U.S.C. § 8252.


                                       Page 3                                                        GAO-03-545T
performance requirements for federal buildings, establishes the use of life
cycle methods and procedures for application of energy conservation
measures, and establishes an interagency energy management task force
to coordinate the activities of the federal government in promoting energy
conservation.

The Energy Policy Act of 1992 (EPACT) was intended to further enhance
federal energy management practices.4 In this regard, it requires the GSA
Administrator to hold biennial conference workshops in each of the
federal regions on energy management, conservation, efficiency, and
planning strategy; requires agencies to conduct energy management
training; requires the establishment of energy audit teams to perform
energy audits of federal facilities; and requires agencies to identify energy
efficient products in carrying out their procurement and supply functions.
Several executive orders5 direct agencies to employ green practices in
facility and fleet management, and executive memorandums encourage
agencies to use energy saving performance contracts and environmentally
friendly landscaping practices.

In addition to facilities-related initiatives, EPACT establishes a minimum
number of alternative fuel vehicles for federal agencies beginning in fiscal
year 1993 and requires the Secretary of Energy to carry out an alterative
fuel vehicle program. According to the most recently available data from
GSA, the federal government operated 596,114 vehicles in fiscal year 2001.
Alternative fuels include ethanol, methanol, natural gas, propane, and
electricity. Alternative fuel vehicles operate on these fuels, although some
of them can operate on gasoline. In total, the Energy Information
Administration estimated that the federal government operated 68,890
alternative fuel vehicles in 2002.




4
Pub. L. No. 102-486, 106 Stat. 2776 (1992).
5
See Executive Orders 13148, 13149, 13123, and 13101.



Page 4                                                           GAO-03-545T
                     The primary program for promoting energy efficiency in the federal
Federal Efforts to   government is DOE’s Federal Energy Management Program (FEMP).
Promote Energy       Established in 1973, FEMP works to reduce the energy cost and
                     environmental impact of federal government practices by advancing
Conservation and     energy efficiency and water conservation, promoting the use of distributed
Green Design         and renewable energy, and improving utility management decisions at
                     federal sites. FEMP provides a range of services to federal agencies aimed
Practices            at helping facility managers achieve greater energy efficiency and cost-
                     effectiveness in areas such as new construction, building retrofits,
                     equipment procurement, and utility management. FEMP also advises
                     agencies on establishing partnerships with the private sector to improve
                     energy efficiency, using innovative technologies, and addressing energy-
                     related policy matters as they pertain to federal facilities. For example,
                     one way that FEMP helps agencies become more energy efficient is
                     through utility energy services contracts. In these contracts, the utility
                     company typically arranges financing and constructs the necessary capital
                     improvements to the agencies’ building systems. In return, the utility is
                     repaid over the term of the contract from the cost savings generated by the
                     newly installed, energy-efficient improvements. This allows agencies to
                     become more energy efficient while minimizing the up-front costs of the
                     capital improvements. According to DOE, since 1995 more than 45 electric
                     and gas utilities have provided project financing for energy and water
                     efficiency upgrades at federal facilities, investing more than $600 million
                     through these contracts.

                     As part of its central management responsibilities in federal real property,
                     GSA encourages agencies to use green or sustainable design approaches in
                     federal construction and renovation projects. The objectives of
                     sustainability are to reduce consumption of nonrenewable resources,
                     minimize waste and impact on the environment, optimize site potential,
                     minimize nonrenewable energy consumption, use environmentally
                     preferable products, protect and conserve water, enhance indoor
                     environmental quality, and optimize operational and maintenance
                     practices. The end result of a sustainable design is a healthier working
                     environment that costs less to maintain over time than traditional methods
                     and is better for the environment. To measure sustainability efforts, GSA
                     and other agencies have begun using the Leadership in Energy and
                     Environmental Design (LEED) rating system. The U.S. Green Building
                     Council—a coalition of leaders from across the building industry working
                     to promote buildings that are environmentally responsible, profitable and
                     healthy places to live and work—developed LEED to help apply principles
                     of sustainable design and development to facilities projects. According to



                     Page 5                                                          GAO-03-545T
                         information from GSA, by using LEED, agencies can gauge the impact of
                         design decisions on energy efficiency and other sustainability factors.


                         By using the principles of sustainable, green design, agencies are trying to
Examples of Agency       improve energy efficiency, reduce life-cycle costs, and reduce
Efforts to Apply         environmental impacts in the design, construction, and operation of
                         federal facilities. Some examples of facilities where these approaches have
Green Principles         been applied are the White House, the Pentagon, and the Zion Canyon
                         National Park Visitor Center.

                     •   According to information from DOE, in 1993 a team of experts from
                         several federal agencies and private organizations helped create a
                         “greening plan” for the White House to be implemented as part of ongoing
                         facility maintenance and operation. Measures taken included changes to
                         the building envelope6 to reduce energy loss through the roof, windows,
                         and walls; and modifications to the lighting systems to increase efficiency
                         and maximize natural lighting. In 1999, DOE estimated that these and
                         other efforts resulted in cost savings of approximately $300,000 annually
                         through reductions in energy, water, landscaping, and waste removal
                         costs. More recently, according to information from the Office of the
                         Federal Environmental Executive,7 the White House installed its first-ever
                         solar electric system in late 2002. This included putting solar panels on the
                         roof of the complex’s primary maintenance building and installing two
                         solar thermal systems to heat the pool and spa and provide domestic hot
                         water.
                     •   According to information from DOE, DOD developed and implemented
                         plans to reduce building energy use and incorporate environmentally
                         sensitive materials, including materials that require the least energy to
                         produce and that can be recycled after use, as part of an extensive $1.1
                         billion renovation of the Pentagon. As part of these efforts, DOD
                         constructed a new state-of-the-art heating and ventilation plant, modified
                         and insulated the building envelope to increase energy efficiency, and built
                         irrigation systems that use water from the nearby Potomac River to
                         irrigate areas around the building. DOD also built two solar electric
                         systems to demonstrate the reliability and feasibility of using solar energy.


                         6
                          The term building envelope includes the walls, roof, and floors that enclose a heated or
                         cooled space.
                         7
                          Under Executive Order 13101, the Federal Environmental Executive chairs the White
                         House Task Force on Waste Prevention and Recycling and seeks to promote sustainable
                         environmental stewardship throughout the federal government.



                         Page 6                                                                        GAO-03-545T
    One of the goals of the renovation project is to cut energy costs by up to 30
    percent by fiscal year 2005, which according to DOD officials could save
    between $4 million and $5 million each year.
•   Energy efficient design was used, according to information from DOE, in
    constructing the new Zion National Park Visitor Center and Transportation
    Center at Zion National Park in Utah that opened in May 2000. According
    to DOE, the National Park Service worked with DOE to create a design
    that preserves the natural beauty of the park while saving energy and
    money. Innovative features included systems that work to naturally cool
    or heat the facility, electricity producing solar panels, and efficient
    landscaping that complements the building and reduces the need for
    irrigation. Overall, DOE predicts that these features will save about
    $14,000 a year. Figure 2 shows the new Zion National Park Center.




    Page 7                                                          GAO-03-545T
    Figure 2: Zion National Park Visitor Center, Utah




    Source: DOE/National Renewable Energy Laboratory; Robb Williamson photographer.


    In addition to these examples, our work at the Government Printing Office
    (GPO) and GSA in recent years illustrated the potential cost benefits of
    investing in energy efficiency. For example:

•   At GPO, the Potomac Electric Power Company (PEPCO) estimated that
    GPO could save over $400,000 a year on energy and maintenance costs by
    replacing its outdated air conditioning chillers with new, more energy




    Page 8                                                                        GAO-03-545T
    efficient chillers.8 We also reported that PEPCO had recommended that
    GPO consider upgrading its energy inefficient lighting at an estimated cost
    of $1.6 million to achieve an estimated $800,000 in annual energy savings.
    According to GPO, it plans to have the chiller project completed in April
    2003 and the lighting upgrade completed by May 2003.
•   In our work on the backlog of repair and alteration needs in GSA-
    controlled federal buildings, we found that 44 buildings in GSA’s inventory
    each had $20 million or more in repair and alteration backlogs.9 Many of
    the repair and alteration needs in these buildings had a direct impact on
    the energy efficiency of the buildings, including aging and inefficient
    plumbing, heating, ventilation, and air conditioning systems. For example,
    the Dwight D. Eisenhower Building in Washington, D.C., had a repair and
    alteration backlog of $216 million, which included the need to address the
    building’s antiquated air conditioning system. GSA officials said that this
    system, which uses about 250 individual window units, is outdated and not
    efficient in cooling the building or conserving energy. Figure 3 shows an
    individual air-conditioning unit in a window in the Eisenhower building.




    8
     U.S. General Accounting Office, Government Printing Office: Space Utilization and
    Potential Opportunities for Savings on Facilities, unnumbered correspondence
    (Washington, D.C.: July 24, 2000).
    9
    U.S. General Accounting Office, Federal Buildings: Funding Repairs and Alterations
    Has Been a Challenge—Expanded Financing Tools Needed, GAO-01-452 (Washington,
    D.C.: Apr. 12, 2001).



    Page 9                                                                   GAO-03-545T
Figure 3: One Of About 250 Inefficient Window Air Conditioning Units in the Dwight
Eisenhower Building in Washington, D.C.




Source: GAO.

Note: Photograph taken in August 2000.




Page 10                                                              GAO-03-545T
                           Despite the possible benefits of using energy efficient, green approaches in
Some Agencies Have         federal construction and renovation projects, available data indicate that
Identified Obstacles       some agencies believe they face significant obstacles in implementing
                           these approaches. In April 2001, the U.S. Green Building Council surveyed
to Using Energy            11 federal real-property-holding agencies about their green building
Efficient, Green           activities.10 Among other things, the survey asked the agencies to identify
                           any obstacles they face in achieving green building goals and objectives.
Approaches                 The obstacles identified by the agencies generally fell into the following
                           areas:

                       •   Many architects, engineers, agency stakeholders, contractors, and
                           customers are not knowledgeable about green building practices and
                           technology. The survey respondents generally said that this lack of
                           knowledge and expertise made it difficult to design, build, and promote
                           green buildings.
                       •   Respondents noted that green projects might have higher initial costs, but
                           actually can be more cost-effective over the life of the facility and have
                           other benefits. The higher initial costs can be more difficult to justify to
                           decisionmakers.
                       •   Related to higher initial costs, respondents expressed concern that it can
                           be difficult to get top agency leaders to make green buildings a
                           management priority. Consequently, the respondents felt that funding
                           decisions are sometimes made without adequate input from design and
                           construction professionals.
                       •   Some of the benefits of green buildings are difficult to quantify. For
                           example, the respondents noted that good measures exist for energy and
                           cost savings, but that many green projects also improve employee
                           productivity and well-being. Further, they said that some higher-priced
                           building materials are better for the environment, which is a benefit
                           difficult to quantify.
                       •   At a time when budget constraints will be pervasive, the higher up-front
                           costs of energy efficient designs could prove to be an especially
                           challenging obstacle. As a result, less costly approaches that are less
                           energy efficient could “look cheaper” in a single year’s appropriation




                           10
                            U.S. Green Building Council, Federal Agency Survey 2001 (Washington, D.C.: Apr. 2001).
                           The 11 agencies surveyed were the National Institute of Standards and Technologies; the
                           National Park Service; the U.S. Air Force Center for Environmental Excellence, Design
                           Group; U.S. Army Corps of Engineers; DOE, Office of Building Technology, State and
                           Community Programs; U.S. Department of the Interior; U.S. Environmental Protection
                           Agency; GSA; U.S. Department of Housing and Urban Development; U.S. Navy, Naval
                           Facilities Engineering Command; and USPS.



                           Page 11                                                                   GAO-03-545T
                   because life cycle costs—including the savings that would result from
                   energy efficient designs—generally occur in later years.

                   In addition to efforts to make federal facilities more energy efficient, other
Agencies’ Use of   initiatives have attempted to reduce the nation’s consumption of
Alternative Fuel   petroleum fuels in transportation through the use of alternative fuels in the
                   federal vehicle fleet. In particular, EPACT set broad goals for replacing the
Vehicles           transportation sector’s use of petroleum fuels by at least 10 percent by the
                   year 2000 and at least 30 percent by the year 2010. To help meet these
                   goals, this act required that the federal government, as well as state
                   governments and certain other fleet operators, purchase vehicles that run
                   on alternative fuels, such as ethanol, methanol, natural gas, propane, and
                   electricity, among others. Further, the act specified that, in 1996, 25
                   percent of the new vehicles purchased by the federal government should
                   operate on alternative fuels, with the target percentage increasing to 33
                   percent in 1997, 50 percent in 1998, and 75 percent in 1999 and beyond.

                   Based on our assessment in 2000, the federal government as a whole has
                   made progress in acquiring alternative fuel vehicles, although it has not
                   always met the act’s annual targets, as shown in table 1 below.11 Further,
                   procurement of these vehicles has been inconsistent across federal
                   agencies: Some agencies have exceeded their purchase mandates in a year
                   when others acquired very few or no alternative fuel vehicles. For
                   example, in 1998, USPS acquired 10,000 ethanol alternative fuel vehicles to
                   deliver the mail. This purchase was the major reason why the federal
                   government collectively met the mandated acquisition target of 50 percent
                   (12,362 alternative fuel vehicles) for that year.




                   11
                     U.S. General Accounting Office, Energy Policy Act of 1992: Limited Progress in
                   Acquiring Alternative Fuel Vehicles and Reaching Fuel Goals, GAO/RCED-00-59
                   (Washington, D.C.: Feb. 11, 2000).



                   Page 12                                                                   GAO-03-545T
Table 1: Federal Acquisition of Alternative Fuel Vehicles

Year      Vehicles required to meet mandates      Reported acquisitions of vehicles
1993                                     5,000                                4,500
1994                                     7,500                                8,000
1995                                    10,000                                4,000
1996                         Data not available                               6,000
1997                                     5,000                                3,624
1998                                    12,362                               14,205
1999                                    19,593                               18,345
2000                                    15,259                               15,000
Source: DOE.


The federal fleet’s acquisition of alternative fuel vehicles has not reduced
gasoline consumption as much as hoped for several reasons. For example,
the act does not establish targets for use of alternative fuels—just the
acquisition of vehicles that can run on them. However, some of the
alternative fuel vehicles that federal agencies have purchased can also run
on gasoline, and fleet officials told us individuals driving the vehicles often
refuel with gasoline because it is much more convenient to find gasoline
refueling stations than refueling stations that supply alternative fuels. In
addition, some drivers have been reluctant to use alternative fuel vehicles
because of safety concerns or a lack of familiarity with the vehicles’
technology and so choose to use the agencies’ gasoline powered vehicles.

According to officials at DOE, the act’s mandates for purchases of
alternative fuel vehicles by federal and other fleets were designed to
demonstrate the use of the vehicles and stimulate purchases of them by
the general public. Some supporters of the mandates believed federal and
other fleets would demand enough alternative fuel vehicles to create a
general market for these vehicles. However, the vehicles in federal and
other fleets represent a small proportion of the vehicles on the road. As a
result, according to DOE, if all of these fleets met the act’s targets for
alternative fuel vehicles, the use of alternative fuels by these vehicles
would represent less than 1 percent of petroleum fuels used in 2010—far
below the act’s goals of 10 and 30 percent replacement in 2000 and 2010,
respectively. In addition, to reach the 10-percent goal, DOE estimates sales
of alternative fuel vehicles nationwide would have to grow by about 1.5 to
1.9 million vehicles per year. By comparison, the entire production of
Ford’s passenger cars in 1996 was slightly more than 1.4 million.

Federal acquisitions of alternative fuel vehicles and their use of alternative
fuels have not met expectations because of the same economic


Page 13                                                                 GAO-03-545T
                 impediments that have discouraged the general public from buying these
                 vehicles and thus abandoning conventional vehicles. These impediments
                 include lack of refueling infrastructure, the relatively lower price of
                 gasoline, limitations in vehicle performance, and higher purchase prices
                 for some of the vehicles.

                 With regard to the overall goals set in the act, limited progress has been
                 made in replacing petroleum fuels with alternative fuels. Based on our
                 work in 2000, DOE estimated that alternative fuels used in alternative fuel
                 vehicles replaced about 334 million gallons of gasoline in 1998,
                 representing about 0.3 percent of total gasoline consumed during that
                 year. In addition, about 3.9 billion gallons of alternative fuels (e.g., ethanol
                 and methanol) were blended with gasoline and used in conventional
                 gasoline vehicles in 1998. Thus, in total, about 4.23 billion gallons of
                 gasoline were replaced by alternative fuels, which represent
                 approximately 3.6 percent of all highway gasoline use—considerably less
                 than the act’s goal of 10 percent in 2000.

                 As we noted in 2000,12 as an alternative approach to meeting the act’s
                 goals, federal fleets could increase efficiency and use less petroleum fuel
                 if, in addition to using alternative fuel vehicles, federal efforts were
                 focused on buying and using gasoline vehicles that are highly fuel-efficient,
                 such as the hybrid gasoline-electric vehicles that have recently entered the
                 market. Allowing federal agencies to acquire these vehicles would reduce
                 the federal fleet’s consumption of gasoline while maintaining the
                 conveniences in refueling and service available with conventional vehicles.


                 For questions regarding this testimony, please contact Bernard L. Ungar
Contacts and     for facilities issues at (202) 512-2834 or at ungarb@gao.gov, or Jim Wells
Acknowledgment   for alternative fuel vehicle issues at (202) 512-6877 or at wellsj@gao.gov.
                 Individuals making key contributions to this testimony included Casey L.
                 Brown, Daniel Haas, David E. Sausville, and Daren Sweeney.




                 12
                  GAO/RCED-00-59



(543054)
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