CBS Newsletter
Summer 1996
pg. 3

Aerial view of Washington D.C.

News From the D.C. Office

Government Purchasing and Market Transformation-Revisited

In previous columns, we discussed the potential for using the enormous buying power of the government as a market-pull mechanism to encourage commercialization of new energy-efficient technologies and to help shift the market toward increased use of today's most energy-efficient products [CBS News Fall 1994, p.3]. The federal government is the world's biggest customer for almost any commercial item, spending well over $10 billion/year on energy-related products. Adding the purchases of state and local government agencies increases the total by a factor of three or more-an order of magnitude larger than all the spending on utility demand-side management programs at their peak! How can we harness this enormous market power in support of energy-efficient (and environmentally preferable) products, especially in light of recent procurement reforms that stress decentralized purchasing decisions and reduced use of "special government requirements"?

Berkeley Lab projects in both Washington, D.C., and California are supporting the "Federal Procurement Challenge," an interagency effort led by the DOE Federal Energy Management Program (FEMP), the White House Council on Environmental Quality, and the OMB Office of Federal Procurement Policy. Twenty-two federal agencies have signed an agreement to shift their purchasing of energy-using products to the "best 25%" of current models on the market. This is in keeping with a 1994 Executive Order that asks each agency to consider how its purchasing can shift to the energy-efficient end of today's market.

The Order also urges federal buyers to help create an entry market that will encourage private firms to invest in developing and introducing even more efficient new technologies because they will have at least one important "anchor buyer"-the federal government. In June, DOE Assistant Secretary Christine Ervin and FEMP director Mark Ginsberg were the keynote speakers at a public meeting soliciting views from manufacturers, vendors, and their federal customers on how federal purchasing can be used most effectively to commercialize new technologies. Already, one promising "technology procurement" is well underway: the Department of Defense is offering to buy six million enhanced-efficiency light bulbs over a three-year period for use in military base housing. The likely technologies include an infrared-enhanced halogen lamp or an improved subcompact fluorescent. Staff from LBNL's lighting program provided technical support for this DOD solicitation.

The E&E Division Washington Office of Berkeley Lab supports these federal procurement initiatives by analyzing data needed for DOE-recommended efficiency levels that help buyers identify the "upper 25% of efficiency" for a number of commonly purchased products. The Office has completed recommendations for several types of residential appliances and equipment and for large water-cooled chillers. Drafts are now under review or in preparation for lighting products, water-saving fittings, boilers, commercial food equipment (ice makers) and office equipment. Commercial HVAC and other equipment will soon follow. These recommendations will be distributed to federal purchasing officers in hard-copy form and also made available at the DOE and LBNL Web sites.

In June, the DOE appliance efficiency recommendations were incorporated in the latest product catalog issued by the General Services Administration (GSA) in the form of an "EE" symbol next to each qualified product. The growing practice of "electronic commerce" offers another important means to disseminate efficiency recommendations. As more federal buyers go on-line to shop for products through the Web-based "GSA Advantage" and other systems, we plan to build in efficiency levels as a primary criterion for product searches.

Procurement strategies will be even more effective if they are linked closely with other market-oriented actions. For example, voluntary programs at both DOE (Technology Introduction Partnerships) and Environmental Protection Agency (ENERGY STAR) have recently added procurement elements, including not only government buying but also volume purchases by other institutional buyers and retailers. EPA and DOE are now joining forces in a national appliance and equipment labeling program, using an updated version of the ENERGY STAR logo. The utility-sponsored Consortium for Energy Efficiency is also considering adding a procurement element to its program to complement utility demand-side management as a source of market pull for energy efficiency.

As other important initiatives come along, we are looking for opportunities to build in an energy-efficient purchasing dimension. For example, a new government wide specification for buying replacement chillers, under an accelerated process called a Basic Ordering Agreement, will include efficiency criteria reflecting the best 25% of models available (Spring 1996, p.3). And there may be important opportunities for using new performance contracting methods, targeted to a specific piece of equipment or building subsystem, to help overcome some of the obstacles to federal purchase of new, pre-commercial technologies.

These ideas are now spreading well beyond the boundaries of federal agencies-and beyond U.S. borders. The Energy Efficient Procurement Collaborative, recently incorporated as a non profit organization, is developing cooperative purchasing programs among state agencies and local governments using shared tools such as product databases and model specifications. This program is led by New York State, with cosponsorship from DOE, EPA, and DOD at the federal level. Recently, the Metropolitan Washington Council of Governments expressed interest in a regional Procurement Challenge, modeled on the federal program. The concept of harnessing government purchases as a force for efficiency in the wider market is also being discussed as part of multinational programs for sustainable development, such as the Climate Technology Initiative and the Hemispheric Energy Strategy. Energy-efficient procurement will be a major theme in presentations and exhibits at meetings this year, including EPA's annual ENERGY STAR Forum, the ACEEE-96 summer study this August, the intergovernmental TEEM-96 conference in September, and the World Energy Efficiency Congress later this fall.

—Jeffrey Harris

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Jeffrey Harris
EETD Division Washington Office
1250 Maryland Ave. S.W. Suite 500
Washington D.C. 20024
(202) 484-0880

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