The Impact of Energy Star’s Possible End on Apartment Operators

Key Takeaways

The U.S. EPA is considering ending the Energy Star program, which promotes energy-efficient appliances and practices.
The Energy Star program has generated $500 billion in savings for consumers and businesses since 1992, with significant annual savings.
Over 1,200 organizations have urged the EPA to retain the program, highlighting its importance to the real estate industry and utility cost savings for residents.

Potential End of Energy Star Program

In early May, sources within the U.S. Environmental Protection Agency (EPA) indicated that the federal government might terminate the long-standing Energy Star program, which promotes energy-efficient appliances. This move is part of a broader initiative to consolidate agency divisions overseeing climate change and energy efficiency. As of now, the program remains operational, and no official announcements regarding its future have been made.

Since its inception in 1992, the Energy Star program has saved consumers and businesses approximately $500 billion in energy costs. Current estimates suggest that it generates about $40 billion in energy savings annually at a relatively low taxpayer cost of $32 million, according to the Institute for Market Transformation (IMT), a nonprofit organization focused on high-quality building solutions.

The program boasts partnerships with thousands of private organizations, including nearly 40% of Fortune 500 companies. Recognized for sustained excellence in supporting Energy Star, recipients like Hines, CBRE, Nuveen Real Estate, and Tishman Speyer exemplify the program’s industry impact. The recent reports about its potential demise have sparked significant concern, prompting over 1,200 organizations to sign letters appealing to the EPA for the program’s continuation. Alex Dews, CEO of IMT, emphasized the program’s public good nature, arguing that eliminating it would be challenging to replicate outside of government oversight.

Industry Impact

Energy Star certifications have long served as key selling points for new multifamily properties, appealing to consumers who prioritize energy efficiency and budgeting, according to Nicole Upano, assistant vice president of housing policy and regulatory affairs at the National Apartment Association (NAA). She stated, “Energy Star certifications are used widely, and they are recognized amongst residents,” underscoring the program’s significant role in attracting tenants concerned about energy consumption.

Beyond appliance certifications, multifamily operators can achieve whole-building Energy Star certification through several pathways. The Portfolio Manager tool, utilized by roughly 25% of U.S. commercial building space, allows users to track energy and resource usage, providing a basis for comparison with peer properties. Over 300,000 buildings used this tool last year alone, reinforcing its status as a reliable benchmark.

The Portfolio Manager supports energy compliance requirements in seven states, 48 local governments, and two Canadian provinces. Many NAA members utilize it to stay compliant with regional regulations. Upano noted that if the Energy Star program were abolished, it could hinder multifamily companies’ ability to save on operating costs and impact their investments.

In light of the uncertain future of Energy Star, industry leaders like Dews recommend that users back up and document their data concerning the Portfolio Manager tool. He stressed the importance of recognizing the program’s wide-reaching role within the industry, warning that its termination could have significant disruptions. The Energy Star program’s fate remains uncertain, but its history and impact on energy efficiency underscore its value to both businesses and residents alike.

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