Administration Slashes Funding for Energy Efficiency Climate Protection While Censoring Environment Report

June 23, 2003

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Wendy Koch, 202-507-4753, Senior Director, Marketing & Communications

WASHINGTON, D.C. — Internal funding cuts to a flagship of the Administration's voluntary climate initiatives raise further questions about the White House's commitment to addressing global warming. In a series of quiet moves, the U.S. Environmental Protection Agency (EPA) recently began cutting funding for the ENERGY STAR® program, notifying many contractors and grantees that budgets are being reduced. Sources close to the Administration indicate that cuts of about 30% are being implemented for the current federal fiscal year that ends September 2003. Though the program is celebrated in the President's National Energy Plan and most energy speeches by Administration officials, these cuts are likely to substantially weaken this popular program.

ENERGY STAR is a national labeling and branding program that addresses global climate change by using voluntary initiatives to promote reductions in greenhouse gases and has enjoyed strong bipartisan support. Combined with the apparent White House censoring of climate change language in EPA's draft Report on the Environment, this move signals further Administration backtracking on climate change.

"While the Bush Administration talks up its voluntary efforts to address climate change, these back-room cuts show that this is mostly hollow rhetoric," noted Steven Nadel, Executive Director of the American Council for an Energy-Efficient Economy (ACEEE). "This is a big step backwards at a time when the United States needs to show forward motion on energy efficiency and climate change issues."

Meanwhile, the gap between U.S. and European carbon emissions has widened. ACEEE's graphic analysis of this "Carbon Gap" (see shows that U.S. carbon emissions grew about 15% from 1990 to 2001, while European emissions declined slightly. "Cutting the ENERGY STAR budget will only widen the Carbon Gap," stated Bill Prindle, ACEEE's Deputy Director.

To date, EPA estimates that ENERGY STAR programs have prevented more than 150 million tons of carbon emissions. American consumers using ENERGY STAR products saved over $6 billion in reduced energy bills in 2001 alone, and each ENERGY STAR dollar generates more than $15 in private investment (source: EPA 2001 ENERGY STAR annual report). So ENERGY STAR is not only a pollution prevention program, it also has an economic stimulus effect-sorely needed in the current economic climate. And with a crisis looming in natural gas supply and prices, efficiency programs like ENERGY STAR are vital in slowing the energy demand growth that is driving this crisis.

In recent years, federal funding for the ENERGY STAR program has averaged approximately $50 million, mostly at EPA but with some funds at the U.S. Department of Energy (DOE). The cuts that began this month are in the EPA portion of the program, although it is noteworthy that DOE's FY 2004 budget request cuts ENERGY STAR funding by 40%. In passing the appropriations bill for EPA this year, the U.S. Senate originally earmarked additional funds for the EPA ENERGY STAR program; the final bill deleted the increase, but noted that the ENERGY STAR program should be at least level-funded.

A cut this large will have significant effects. In this year alone, it cause about 10 million tons of increased carbon emissions, over $1 billion in higher energy bills for consumers, and $200 million in reduced investment by U.S. businesses.

Despite the threat, final decisions lie at the Office of Management and Budget, which has yet to release the operating plan for fiscal year 2003 (which ends this September), further raising eyebrows. "EPA tells us that final decisions have not been made," noted Nadel. "If this is the case, we urge EPA and the Administration to restore ENERGY STAR funding to last years level in order to avoid crippling this vital program."