Energy Savings by the Government: Conservation Begins at Home

Government Procurement and Operations, the second volume in the Environmental Law Institute's (ELI's) State and Local Energy Conservation Series, will be available in July from Ballinger Publishing Company of Cambridge, Massachusetts.¹ Written by Ivan J. Tether, an ELI staff attorney, thebook considers the issue of what goverments — usually in a posture of controlling the rest of society — can do to run their own houses with energy thrift.

More specifically, the book examines the laws governing state and local procurement and the institutions involved in it. The author identifies legal, political, bureaucratic, and economic stumbling blocks to the conservation of energy by the government and offers a broad range of strategies for overcoming these impediments and for mounting affirmative conservation programs. Some of these strategies are supplemented with legislative approaches that suggest appropriate statutory implementation.

It is difficult at this time to assess precisely the potential for energy savings in government procurement and operations — in part because relatively few state or local governments have catalogued their energy use. This book discusses energy audits that governments can use in developing conservation goals. Despite a lack of statistics, an appreciation of the energy impact of government procurement can be obtained by looking at dollar amounts: state and local procurements in 1973 totalled $75.7 billion (about 50 percent more than federal procurement for that year). This purchasing power can make its weight felt in many ways.

A case study of procurement of 7,650 water heaters by the Federal Supply Service (FSS) provides a more tangible example of savings possible through the use of energy-conserving procurement strategies. Using life-cycle costing — a strategy that selects purchases on the basis of the total cost of owning them, rather than just the purchase price — the FSS achieved anticipated energy savings of 79.4 X 10<6"> kilowatt hours (kwh) and at the same time projected a savings of $326,457.

Reducing Direct Energy Consumption

The first and major chapter of Government Procurement and Operations discusses ways of saving energy that governments pay for directly — usually in the form of utility or gasoline bills. This energy use by no means represents the whole of government consumption, but it is the most noticeable aspect of energy use and is thus the easiest to deal with, both technically and politically. Reducing direct energy consumption is also most likely to save money as well as energy, and this aspect seldom displeases taxpayers.

It is important to note from the outset, however, that government procurement can affect much more than just the government's internal housekeeping. Procurement is a tool with many uses. In addition to saving the government's direct energy costs, it can also (1) set an example for the private sector; (2) stimulate the development of innovative energy technology by providing it with a test market; (3) help get the ball rolling in the creation of markets for recycled materials; and (4) force contractors to adhere to certain sociallybeneficial practices in order to be eligible for government contracts. All applicable benefits should be considered in evaluating procurement strategies.

The major impediment to energy conservation in government purchasing is the practice, sometimes required by law, of accepting the low bid without regard for other costs that ownership and use of that item may entail. Applied to energy-consuming items, this practice can result in the purchase of inefficient products whose energy waste will quickly gobble up dollar savings realized by "buying the cheapest." The problem is thus one of factoring energy efficiency into the formula for awarding contracts and doing this with enough mathematical precision to overcome challenges of subjective favoritism from disappointed low bidders. The book suggests three strategies that might be used to inject energy considerations into contract award: (1) energy efficiency standards; (2) percentage price differentials; and (3) life-cycle costing. Life-cycle costing, referred to earlier, is probably the best of the three, but it can require complex calculations and testing. Individual circumstances might require a less complex, if slightly less effective, approach such as using energy efficiency standards.

A second problem confronting energy saving by governments is the failure, for whatever reason, of government contractors to develop innovative products that are more energy-efficient. Life-cycle costing, by allowing a higher-priced yet energy-efficient product to be awarded a contract over a cut-rate energy waster, [7 ELR 10131] contributes to innovation, but there is more to the problem. Government-ordained design specifications can quite obviously stand in the way of constructive change. If a government defines its desired product in precise terms of the way it must be constructed, a contractor will have little or no latitude to innovate. A better approach is to define a product in terms of the way it must perform and leave at least some of the design to the contractor.

Reducing Indirect Energy Consumption

As suggested earlier, a comprehensive approach to conservation requires that governments consider their indirect as well as direct consumption. It is important to remember that the consumption of a product entails consumption of the energy used to "manufacture" that product. "Manufacture" is used here to include all the processes involved from extracting or harvesting the raw material to transportation of the finished product to the government's doorstep. This conceptual approach is discussed at several points in the book, and the following specific strategies are suggested: (1) purchasing items made from recycled materials; (2) requiring the transport of government purchases by the most energy-efficient means; and (3) requiring use of returnable beverage containers at government facilities.

Another way of approaching this indirect energy consumption is to require contractors to adhere to certain minimum conservation standards in their operations on pain of being barred from bidding on government contracts. The federal government has used this strategy (debarment) under the Clean Air Act Amendments of 1970 and the Federal Water Pollution Control Act Amendments of 1972. These acts prohibit the government from contracting with any person for the performance of a contract at a facility that is in violation of the respective statute.² Adoption of this approach by a state or local government would require careful examination of its likely effect upon competition for government contracts as well as development of conservation standards for industry. This strategy is not highly recommended, particularly for small governments, but it is presented as an alternative for future consideration and refinement.

After the Product is Purchased

The latter portion of the book considers conservation opportunities relating to government property subsequent to its purchase. Even the most energy-efficient product available can be wastefully used or poorly maintained so that much energy will be needlessly lost. The author groups methods for dealing with this and related problems under the rubric "ownership strategies." These include: (1) auditing energy use in order to provide a baseline from which to launch a conservation program and in order to measure the success of such a program; (2) modifying (retrofitting) government property (primarily buildings) that has a long useful life and that has fallen behind the state-of-the-art of energy efficiency; (3) managing property in such a way as to minimize its energy consumption or managing employees who work with property so they do not waste; and (4) maintaining machines (e.g., automobiles) so they function efficiently.

The final step in purchasing and owning property is disposing of it; here too there is conservation potential. Strategies in this area are divided according to the nature of the property that is no longer needed, whether it remains functional in its original form or is fit only for materials salvage. Property that remains functional should be transferred to government departments that can use it or should be sold to the general public. Notwithstanding the seeming simplicity of this approach, bureaucratic retentiveness can stand in the way. Strict inventory control coupled with prompt supply of departmental needs can help save the energy that is wasted by storing usable items when this storage requires governments to purchase more than they need.

Government property that is fit only for salvage should by recycled. Recycling avoids repetition of many of the steps of production and saves the energy that those steps would otherwise consume. For example, recycling aluminum avoids 96 percent of the energy used to refine virgin ore.³ One of the questions discussed in this regard is whether governments should have their own recycling plants.

Conclusion

Perhaps the significance of government procurement and operations as a tool for implementing energy conservation and solutions to other important social problems lies not in its power in a single area but in its pervasiveness. Governments are in some ways microcosms of the rest of society and, as such, experience many of the same problems and perform many of the same functions. This fact provides governments at all levels with both opportunity and challenge. By attempting to run their own houses in the most socially-conscious manner, governments add fiber to their exhortations on social issues. Society is increasingly demanding more than empty verbiage from its governors — and actions speak louder than words. The government that undertakes an energetic and innovative energy conservation program at its own facilities will set a valuable example and will also provide a fertile testing ground for new, untried methods and machinery.

1. This book is one of the final products (there will be eight in all) of ELI's Energy Conservation Project, funded by the National Science Foundation.

The cursory description contained in this Comment on Government Procurement and Operations represents an attempt to provide a general background to some of the problems discussed, as well as a flavor of the solutions suggested. Strategies outlined here are often much more complex than a simplistic description might disclose, and there are many more caveats attached to their use than could fit in this brief summary.

2. Clean Air Act Amendments of 1970, § 306, 42 U.S.C. § 1857h-4 (1970), ELR 41225; Federal Water Pollution Control Act Amendments of 1972, § 508, 33 U.S.C. § 1368 (Supp. 1973), ELR 41125.

3. Franklin, Bendersky, Park & Hunt, Potential Energy Conservation from Recycling Metals in Urban Solid Waste, in THE ENERGY CONSERVATION PAPERS 172 (R. Williams, ed. 1975).