DOE's clean-power mandate seen undermining Obama's sustainability initiative

Government contractors are getting progressively concerned about a proposed rule that would require new and significantly renovated federal buildings to eliminate fossil fuel-generated energy use by 2030 -- an ambitious mandate they say could derail governmentwide sustainability efforts.

The Department of Energy proposed the rule in 2010, following a little-known provision in the Energy Independence and Security Act. The bill -- which President George W. Bush signed into law in 2007 -- sets out national energy goals ranging from increased production of biofuels to better fuel economy in vehicles.

But within the 300-page document are a few lines outlining a particularly aggressive mandate for new federal buildings and those that undergo renovations totaling $2.5 million or more. By 2015, such buildings are required to consume 65 percent less than the fossil fuel-generated energy used in 2003; by 2030, that number reaches 100 percent less.

That mandate could stall the $2 billion in energy upgrades President Obama pledged in December, according to the Federal Performance Contracting Coalition (FPCC). Obama's commitment called for agencies to enter Energy Savings Performance Contracts, where companies pay the upfront costs of renovations in return for the annual cost savings realized by the agency.

"We are very committed to the government's energy efficiency and renewable energy mandates in federal buildings, as well as the sustainability goals," said FPCC coordinator Jennifer Schafer-Soderman, whose group represents companies like Chevron and Lockheed Martin that enter into energy performance contracts. "Our concern is if we layer on the elimination of fossil fuels, we will dampen and potentially stop deep retrofits on federal government."


Schafer-Soderman argues that the law's threshold for renovations -- $2.5 million -- could prevent agencies from undergoing the "deep retrofits" needed to substantially curb energy use. Indeed, most energy-efficient renovations cost far more; the Architect for the Capitol, for example, entered a $40 million contract in 2009 with NORESCO to upgrade House office buildings.

In short, a mandate meant to ensure energy efficiency in new buildings could halt the White House's current effort to ensure energy efficiency in existing buildings.

Schafer-Soderman's group joined the American Gas Association earlier this month to air their concerns with the Office of Information and Regulatory Affairs in the White House Office of Management and Budget. OIRA is reviewing DOE's rule that would implement the provisions in the 2007 law; so far, the final rule has sat in the White House office for almost eight months.

An OMB spokeswoman did not return a request for comment, and a DOE spokeswoman declined to discuss specifics, saying the rule was in the "interagency review process." But an issue brief the groups brought to the meeting pins the hold up on "challenges observed by federal agencies when assessing how to comply with the requirement beyond the first few years." They request that Congress repeal the provision.

"Agencies, many of which do not have the ability to comply with the fossil fuel generated energy reduction mandate, and some of which are using natural gas on site to improve efficiencies, will not undertake the retrofits or renovations," the brief reads. "This will end up costing the federal government, and hence the taxpayer, more for its energy bills."

The groups also contend the mandate would restrict technologies like combined heat-and-power, which is fueled by natural gas. DOE seems to harbor similar concerns, writing in the rule proposal that the agency aims to "ensure the rule does not penalize or discourage the use of on-site CHP systems."

That may be possible through exemptions, which the 2007 law allows. But that would require a top official to sign off, creating a hurdle that Schafer-Soderman contends could discourage lower-ranked federal officials from pursuing significant retrofits in the first place.

And then there's the political angle.

"President Obama has recently stressed the need for development of 'every available source' of American energy in the most recent State of the Union address," the brief reads. "This mandate would halt the pursuit of increased use of natural gas to support the national priorities of helping to improve our economy, reduce environmental impacts and secure our nation's energy future."

The 2007 provision first showed up in another bill, Rep. Henry Waxman's "Carbon-Neutral Government Act." The California Democrat based it off the so-called 2030 Challenge, developed by the nonprofit Architecture 2030. Broadly supported, it set 2030 as the goal for new building to be carbon-neutral; the American Institute of Architects promoted the challenge as achievable.

In Waxman's bill -- written while he was chairman of the House Oversight and Government Reform Committee -- the 2030 mandate applied to new buildings and those with "major renovations." But the wording was changed in the Energy Independence and Security Act to include renovations that cost more than $2.5 million or require the General Services Administration to transmit a "prospectus" to Congress.

A Democratic staffer with knowledge of the bill said there were objections in the House-Senate conference on the bill that the definition of "major renovations" was too open-ended, leading to the $2.5 million limit.

But, the staffer said, "repealing this provision would be a huge mistake."

"We are not going to achieve significant improvements in building energy efficiency absent strong goals," the staffer said. "The gains of applying these requirements to all new buildings and truly major renovations should far outweigh any negative effects of possibly discouraging a small fraction of marginally cost-effective renovations."

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