The federal government is the largest single purchaser of energy in the United States. Advocates for improving energy efficiency, achieving energy independence, and reducing greenhouse gas (GHG) emissions believe the federal government can show leadership by reducing its federal energy use. Energy Savings Performance Contracts (ESPCs) authorized under the act, offered federal agencies indirect incentives to make energy efficiency improvements through private funding that agencies pay back with energy savings. The Energy Independence and Security Act of 2007 (EISA) mandated further energy savings measures throughout government operations and facilities, and permanently reauthorized "energy savings performance contracts." Executive Order 13423 (Strengthening Federal Environmental Energy, and Transportation Management) directed federal agencies to reduce GHG emissions by reducing energy intensity. Executive Order 13514 (Federal leadership in Environmental, Energy, and Economic Performance) followed with GHG reduction goals for federal agencies. Policy Considerations—Barriers to Achieving Energy Efficiency and GHG Reduction Goals

The GHG emission reduction goals of EO 13514 represent new initiatives that the federal government may only realize in the near term through incremental improvements in energy efficiency or reduced energy use. Spending on electricity represented the equivalent of one-third of 1% of the federal discretionary budget. In the case of ESPCs, agencies "locked-in" the pre-improvement budget for energy in order to pay for the energy improvement, which also allows the agencies to retain the balance of their energy savings. The federal government's prospect of seeing energy reduction translated into a budget reduction may be low. However, policy makers may want to weigh the direct monetary savings against the clean energy benefits of renewable energy in terms of avoided emissions of regulated pollutants and greenhouse gases to the environment. Policy makers may wish to question whether further improvements may come in smaller increments at increasingly higher costs. Recent Laws and Executive Orders

Two recent laws have provisions aimed at improving energy efficiency in federal facilities: the Energy Policy Act of 2005 (EPAct 2005) and the Energy Independence and Security Act of 2007 (EISA). 109-58 )
EPAct 2005 included three provisions to reduce energy consumption and improve energy efficiency in federal agencies: smart meters to monitor electricity use, efficiency standards to reduce energy consumption in new buildings, and increased renewable energy use. Section 512 ( Financing flexibility ) authorized federal agencies to use a combination of appropriated funds and private financing for Energy Savings Performance Contracts (ESPC). Executive Order 13514—Federal Leadership in Environmental, Energy, and Economic Performance
EO 13514 (2009) establishes an integrated strategy to advance "sustainability" in the federal government and a priority to reduce greenhouse gas (GHG) emissions for federal agencies.
This report identifies incentives for and barriers to federal agencies achieving the energy efficiency goals and greenhouse gas (GHG) reduction targets outlined in recent laws and executive orders.
The federal government is the single largest consumer of energy in the United States, but consumes only 1% of the total energy used. Federal energy spending represents upwards of 1% of its total budget (discretionary and mandatory spending). Since the 1970s, Congress has enacted various laws that reduce energy consumption in the federal sector by improving energy efficiency. The Energy Policy Act of 2005 (EPAct 2005) included measures to reduce energy and water in congressional buildings, install advanced meters to reduce electricity use in federal buildings, enact performance standards to improve federal buildings, and to reduce the federal government's electric energy consumption through renewable energy offsets (P.L. 109-58). The Energy Independence and Security Act of 2007 (EISA) mandated further energy savings measures in government operations, including energy upgrades to the Capitol complex, permanent authority to use "energy savings performance contracts," and federal procurement of energy efficient products and renewable fuels (P.L. 110-140).
Two recent executive orders guide federal agencies in reducing energy consumption and GHG emissions. In 2007, Executive Order 13423, Strengthening Federal Environmental Energy, and Transportation Management directed federal agencies to improve energy efficiency and reduce greenhouse gas emissions by reducing energy intensity. In 2009, Executive Order 13514, Federal Leadership in Environmental, Energy, and Economic Performance established GHG emissions reduction goals for federal agencies.
Federal agencies can take advantage of several financing mechanisms to make energy efficiency improvements without increasing their operating budgets. These include Energy Savings Performance Contracts, Utility Energy Savings Contracts, and Power Purchase Agreements. In some cases, agencies may share in the savings gained from reduced energy costs made through the improvements. New authority to combine appropriated funds with energy savings performance contracts could further energy efficiency improvements, but the lack of federal rules delays implementation. However, federal agencies may be reluctant to participate in this financing option if it reduces their opportunity to retain savings from the improvements.
The new GHG reduction goals come after three decades of effort to reduce energy consumption. GHG emissions associated with operating federal buildings result from consuming fossil fuels used in generating electricity and heating. Significant energy reduction resulted early from easily achievable, low-cost improvements that translate into GHG reductions. The opportunity for GHG reductions in the future may come through smaller, more difficult to achieve reductions in energy consumption based on high-tech solutions.
The prospect of reducing the federal budget by reducing energy consumption may be low. However, policy makers may wish to weigh direct monetary savings against the benefits of clean energy in terms of avoided emissions of regulated pollutants and greenhouse gases.