State Government Lead by Example
State governments can advance energy-efficient technologies and practices in the marketplace by promoting energy efficiency in their own everyday operations, a practice commonly known as “Leading by Example” (LBE). Taking actions to improve the energy efficiency of government-owned and -leased facilities and fleets can accrue multiple benefits for both the government and the people it serves. State governments spend more than $11 billion annually on energy, which can account for as much as 10% of a typical government’s annual operating budget (EPA 2009). Implementing cost-effective energy efficiency processes and technologies is a proven solution to reduce wasteful spending and help states reduce their own costs of operation.
This toolkit uses information from EPA’s State Lead by Example Guide, a comprehensive resource for state and local governments seeking to start or improve upon an energy efficiency Lead by Example program. By developing LBE programs, states:
- Demonstrate leadership
- Reduce energy consumption, energy bills, greenhouse gas emissions, and other air pollutants
- Foster markets for energy-efficient products and encourage economic development in local and regional communities
- Offer greater energy price certainty
- Promote sustainable alternatives to conventional practices
- Provide health and productivity benefits
- Increase asset value and reduce maintenance costs in energy-efficient buildings
State and local governments who develop robust LBE programs and reliably track program performance can count the resulting energy and emission reductions toward efforts to comply with federal air regulations. To learn more about how states can include LBE programs in Clean Power Plan compliance efforts, visit this ACEEE white paper.
Types of LBE Efforts
State governments can adopt foundational policies to reduce energy use throughout state-operated facilities. Below, we identify four areas state governments can target for energy efficiency improvements – new and existing state buildings requirements, benchmarking of public buildings, product procurement, and vehicle fleets. We provide two state examples for each type of LBE effort. For more examples, ACEEE’s State and Local Policy Database tracks LBE energy efficiency policies in all 50 states, the District of Columbia, and several territories.
New and Existing State Buildings Requirements
Policies may target existing buildings by requiring all state executive agencies to reduce their energy use by a set percentage over a certain amount of time. To finance energy efficiency projects, states can allow and enable agencies to enter into contracts with private energy service companies (ESCOs). States can also adopt energy codes for existing buildings that are more stringent than existing state standards, or they can target new construction by requiring new buildings or new construction (i.e., renovations) to meet energy performance requirements, such as those set forth by the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) criteria.
- Colorado: Executive Order D005 05 (“Greening of State Government”) charges all state agencies and offices with reducing energy consumption 20% by FY2012, from FY2006 levels. The state reached this goal, and in 2015 it enacted Executive Order D 2015-013, setting another energy savings target of 12% by FY2020, from an FY2015 baseline. This order also established a new Greening Government Leadership Council with representatives from every state agency, tasked with supporting efforts to make government operations more sustainable.
- Oregon: The State Energy Efficiency Design (SEED) program requires all Oregon state facilities constructed after June 2001 to exceed the energy conservation provisions of the Oregon State Building Code by at least 20%. SEED also requires existing buildings to reduce energy use 20% by 2015, from a 2000 baseline. The state reached this goal in 2012, and the Governor set a new energy savings target of 20 percent by 2023 in his 10-Year Energy Action Plan. Agencies are working toward that goal now via benchmarking and comparisons with the Buildings Performance Database.
State governments can require agencies to benchmark building energy usage in order to ensure the collection of public building data, better understand their building stock, and allow for frequent measurement of progress toward energy efficiency goals. Mandatory benchmarking policies help states identify energy efficiency opportunities and prioritize energy efficiency projects. Several states require building energy audits either at the beginning of program implementation, at regular intervals throughout implementation (e.g., every five years), or as needed in buildings that exceed average energy consumption. Agencies can submit their energy usage data to the state energy office on a regular basis, and states may also publicly disclose results. Many states already track data using EPA’s ENERGY STAR Portfolio Manager, but others use other data collection platforms or have created their own, some of which integrate with ENERGY STAR. States can use automated benchmarking web services to directly share energy data with their benchmarking platforms, thereby reducing the workload of the designated energy manager. Through these platforms states can compile data and compare building types and agencies’ portfolios.
State and local governments can also require residential and commercial building owners to benchmark and disclosure building energy use. Building disclosure and transparency laws improve consumers’ awareness of the energy use of homes and commercial buildings being offered for sale or lease, which can have a significant impact on the economic value of a home or building (ACEEE 2016). The Institute for Market Transformation tracks state benchmarking policies in the public, residential, and commercial sectors through Buildingrating.org.
- District of Columbia: The Clean and Affordable Energy Act of 2008 requires all commercial and multifamily buildings over 50,000 square feet and all city government buildings over 10,000 square feet to report benchmarking data on a yearly basis. The District uses EPA’s ENERGY STAR Portfolio Manager as a standard for building energy performance, measuring total energy use, energy intensity, and carbon emissions. Approximately 480 buildings representing 120 million square feet, have taken the next step and been certified with the ENERGY STAR label. Results for public buildings are available at BuildSmartDC.com, and results for privately-owned buildings are available as spreadsheets on the District Department of Energy and Environment’s website.
- Minnesota : Executive Order 11-12 (2011) calls for a 20% reduction in energy use in state facilities and requires the use of the B3 Energy Benchmarking website to track these efforts. Executive Order 11-13 (2011) requires each state agency to establish an energy savings goal and report annual progress on these goals. All public entities throughout the State of Minnesota are able to access the B3 Benchmarking tool via a free online user profile. Over 8,000 public buildings – including state agencies, city and county facilities, higher education campuses, and school districts – use the tool to track energy consumption, potential energy savings, total dollar savings, and other metrics.
State governments may also target the equipment and electronics within their facilities by requiring the purchase of energy-efficient products. Product procurement policies often require Departments of Administrative or General Services to procure ENERGY STAR-labeled products. Energy-efficient product procurement can also help develop an in-state market for clean energy products (EPA 2009).
- Pennsylvania : Executive Order 2004-12 (2004) requires the Department of General Services, in its capacity as the centralized coordinator of the state's energy management and conservation measures in Commonwealth facilities for the Executive Agencies, to procure Energy Star and other energy-efficient products where economical and consistent with life-cycle cost analysis.
- Massachusetts: Executive Order 515 (2009) establishes the Environmental Purchasing Policy for all Commonwealth Executive Departments. The policy requires all departments to procure environmentally preferable products and services whenever possible, and it directs administering agencies to establish minimum energy performance standards for all agencies to adhere to.
Governments seeking to improve the fuel efficiency of their vehicle fleets may enact procurement policies that call for a fleet-wide reduction in fuel consumption, or an increase in average miles per gallon (mpg). State agencies can also require a certain percent of new vehicle purchases to be hybrid or electric.
- Tennessee : Tenn. Code Ann. § 4-3-1109 requires that 25% of newly purchased vehicles be hybrid electric or compact fuel efficient vehicles, provided that such vehicles are available at the time of procurement. The state also set a target goal that 100% of newly purchased vehicles be energy-efficient or alternative fuel motor vehicles. All 143 vehicles purchased during FY2015 were energy-efficient, so the state met this goal.
- Colorado : Executive Order D0011 07 (2007) directs agencies to reduce petroleum consumption by state fleets by 25% by 2012, compared to FY 2005-2006 levels, while increasing fleet efficiency. Executive Order D 2015-013 (2015) renews this target, requiring a reduction in petroleum-based fuel consumption per vehicle 20% by 2020 from a baseline of FY 2015. The state also recently completed a state fleet opportunity assessment, is piloting idling reduction technologies in trucks, and leads a program to provide technical consulting to public and private fleets throughout the state.
Program Design and Implementation
- Once a state determines what actions it wants to take, it should establish an LBE program framework. The program framework should concentrate on principal actors for implementation and a government-wide policy to underpin the LBE actions.
- Once a program framework is set, a state can then develop a comprehensive program by integrating multiple LBE activities, financing the LBE program, conducting communications and outreach, and providing technical and financial assistance to governmental agencies.
- Finally, the program should include plans to track, evaluate, and report on LBE program performance.
- Responsibility: Gains high-level support from the governor and legislature by making the case for LBE and partners with key agencies to identify energy savings opportunities, develop a plan, guide program implementation, and measure progress.
- Composition: In many states the department of general services or facilities management oversees performance contracting, so this department will likely play a prominent advisory role. The personnel assigned to the LBE team should have responsibility that relates to energy usage or sustainability in the state government. Facility managers, finance personnel, and any personnel engaged with energy or strategic decision-making should make up the core of the LBE team.
- Responsibility: The LBE team must collaborate across agencies in order to inform, educate, and guide the implementation process. Participation from supporting agencies in the planning and implementation processes strengthens the buy-in for the program across the state government operations. This engagement allows the LBE team to develop a system of training and technical assistance that gradually devolves responsibility for implementation to the agencies themselves, with minimal oversight from the LBE team. States with robust LBE programs have identified key officers in all agencies involved to help coordinate project implementation and submit progress reports to the LBE leadership team.
- Composition: Executive branch, state energy office, state legislature, state department of general services or administration, state housing and economic development offices, local governments, school districts, colleges, universities, and other agencies.
Energy Savings Performance Contracts (ESPCs) allow federal, state, or municipal government facilities to enter into a performance-based agreement with an Energy Service Company (ESCO), which performs building retrofits that achieve significant energy and dollar savings. The contract permits the facility owner to pay the ESCO for its services with the money saved from installed energy efficiency measures. Other financing tools include bonds, loans, lease-purchase agreements, grants, and procurement or capital budgets. EPA has more resources on how to fund LBE Programs.
To achieve greater energy and economic benefits, states can foster a regulatory environment that encourages the use of ESPCs in state facilities by providing the right support, leadership, and tools:
- Support : Most states have ESPC-enabling legislation, but the strongest policies explicitly promote the use of ESPCs to improve the energy efficiency of public buildings through statutory requirements, recommendations, or explicit preference for using ESPCs. States can also issue executive orders that promote or require ESPCs and offer financial incentives for agencies seeking to use ESPCs.
- Leadership : States can offer a program that directly coordinates energy savings performance contracting, or appoint a specific leadership team or state agency that serves as the lead contact for implementing ESPCs. Technical field advisors can complement the lead program agencies by assisting state facility managers across the state.
- Tools : States can offer documents to streamline and standardize the ESPC process, such as a list of prequalified service companies, model contracts, and/or a manual that lays out the procedures required in order for state agencies to utilize ESPCs.
The Energy Services Coalition best practices page has more information on ESPC best practices, and resources. The U.S. Department of Energy has also assembled a variety of model documents to help states launch energy efficiency projects through ESPCs.
Communication and Outreach
Communication of LBE strategies and goals is important for two primary reasons:
- To gain support across the multiple government agencies directly and indirectly involved in implementation, and
- To increase visibility of these programs both internally and externally
The following actions will help ensure internal and external support for LBE programs:
- Develop contacts and champions for LBE programs and communicate with potentially adversarial staff throughout agencies
- Match LBE programs with a well-planned communications and outreach campaign. Inform agency personnel through training seminars and the dispersal of educational materials.
- Extend communications and outreach to stakeholders outside the government by creating a web site and other public material extolling the numerous benefits and achievements of LBE initiatives. This will help the general public understand the smart investments first-hand and learn how to “follow the lead.”
Evaluation, Measurement, and Verification (EM&V)
Prior to program implementation, states should enact a plan that lays out the steps necessary to properly evaluate, measure, and verify progress. The way the lead by example policy is structured will affect critical EM&V metrics. For example, a state that has established an energy savings target will need to determine a baseline year, an end year, and a process for measuring energy use across the implementation period. A state engaging in energy performance contracting can tap into the established and extensively documented measurement and verification approaches already used by ESCO industry. The plan should include goals and metrics to indicate levels of progress as well as the tracking, evaluation, and reporting mechanisms that will be used.
Establishing a Baseline
In order to measure LBE program progress, participating agencies must understand energy consumption prior to implementation and develop protocols for regularly measuring and verifying energy savings. By identifying current energy consumption state agencies can more reliably track progress toward meeting energy or emissions targets. Documenting the baseline energy use of state government facilities and identifying patterns of waste also strengthens the business case for an LBE program by demonstrating the certainty of energy cost savings.
Define Goals and Metrics for Progress
In partnership with NGOs and government agencies, the ESCO industry has established and extensively documented common measurement and verification (M&V) approaches. While ESCOs or their third-party evaluators do conduct M&V to ensure their clients’ savings, they often use project-based M&V (PB-MV), or measure-based deemed or stipulated savings values. Under a PB-MV approach ESCOs quantify savings for each project through the end of a contractual savings agreement, instead of quantifying savings for just a sample of projects then estimating program-wide savings (SEE Action 2016).
Supporting Lead by Example at the Local Level
Local governments can lead by example too, for example, in governmental facilities and fleets, K-12 schools and water and wastewater facilities – all major energy users. State governments can assist these efforts by providing financial incentives and technical assistance. More information on local government lead by example initiatives can be found in ACEEE’s Local Policy Toolkit and in an ACEEE white paper on how states can enable local governments to advance energy efficiency. In addition, EPA offers an excellent resource for energy efficiency in local government buildings.
State Policy Toolkit
- Energy Efficiency Resource Standards
- Utility Business Models
- State Government Lead by Example
- Evaluation, Measurement and Verification (EM&V)
- Financing Energy Efficiency
- Large Customer Self-Direct
- Policies and Resources for CHP Deployment
- Energy Usage Data Access
- Low-Income Programs for Regulators
- Multifamily Guide for Regulators
- Residential Energy Use Disclosure: A Guide for Policymakers
- How State Governments Enable Local Governments to Advance Efficiency