S. Hrg. 111–784 CUTTING THE FEDERAL GOVERNMENT’S ENERGY BILL: AN EXAMINATION OF THE SUSTAINABLE FEDERAL GOVERNMENT EXECUTIVE ORDER HEARING BEFORETHE FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, FEDERAL SERVICES, AND INTERNATIONAL SECURITY SUBCOMMITTEE OFTHE COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS UNITED STATES SENATE OFTHE ONE HUNDRED ELEVENTH CONGRESS SECOND SESSION JANUARY 27, 2010 Available via http://www.gpoaccess.gov/congress/index.html Printed for the use of the Committee on Homeland Security and Governmental Affairs ( U.S. GOVERNMENT PRINTING OFFICE 56–839PDF WASHINGTON : 2011 For sale by the Superintendent of Documents, U.S. Government Printing Office, http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202–512–1800, or 866–512–1800 (toll-free). E-mail, [email protected]. R E TILL S DI with D330-44585-7600 ph44585 on VerDate Nov 24 2008 11:12 Jan 05, 2011 Jkt 056839 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 P:\DOCS\56839.TXT SAFFAIRS PsN: PAT COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS JOSEPH I. LIEBERMAN, Connecticut, Chairman CARL LEVIN, Michigan SUSAN M. COLLINS, Maine DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware JOHN MCCAIN, Arizona MARK L. PRYOR, Arkansas GEORGE V. VOINOVICH, Ohio MARY L. LANDRIEU, Louisiana JOHN ENSIGN, Nevada CLAIRE MCCASKILL, Missouri LINDSEY GRAHAM, South Carolina JON TESTER, Montana ROBERT F. BENNETT, Utah ROLAND W. BURRIS, Illinois PAUL G. KIRK, JR., Massachusetts MICHAEL L. ALEXANDER, Staff Director BRANDON L. MILHORN, Minority Staff Director and Chief Counsel TRINA DRIESSNACK TYRER, Chief Clerk SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, FEDERAL SERVICES, AND INTERNATIONAL SECURITY THOMAS R. CARPER, Delaware, Chairman CARL LEVIN, Michigan JOHN MCCAIN, Arizona DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma MARK L. PRYOR, Arkansas GEORGE V. VOINOVICH, Ohio CLAIRE MCCASKILL, Missouri JOHN ENSIGN, Nevada ROLAND W. BURRIS, Illinois JOHN KILVINGTON, Staff Director PETER TYLER, Professional Staff Member BRYAN PARKER, Staff Director and General Counsel to the Minority DEIRDRE G. ARMSTRONG, Chief Clerk R E STILL (II) DI with D330-44585-7600 ph44585 on VerDate Nov 24 2008 11:12 Jan 05, 2011 Jkt 056839 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 P:\DOCS\56839.TXT SAFFAIRS PsN: PAT C O N T E N T S Opening statement: Page Senator Carper ................................................................................................. 1 Prepared statement: Senator Carper ................................................................................................. 33 Senator McCain ................................................................................................ 36 WITNESSES WEDNESDAY, JANUARY 27, 2010 Nancy Sutley, Chair, Council on Environmental Quality .................................... 5 Richard Kidd, Program Manager, Federal Energy Management Program, U.S. Department of Energy ......................................................................................... 60 Dorothy Robyn, Ph.D., Deputy Under Secretary of Defense, for Installations and Environment, U.S. Department of Defense ................................................ 9 Sam Pulcrano, Vice President, Office of Sustainability, U.S. Postal Service ..... 12 ALPHABETICAL LIST OF WITNESSES Kidd, Richard: Testimony .......................................................................................................... 6 Prepared statement .......................................................................................... 41 Pulcrano, Sam: Testimony .......................................................................................................... 12 Prepared statement .......................................................................................... 59 Robyn, Dorothy, Ph.D.: Testimony .......................................................................................................... 9 Prepared statement .......................................................................................... 52 Sutley, Nancy: Testimony .......................................................................................................... 5 Prepared statement .......................................................................................... 38 APPENDIX Questions and responses for the Record from: Ms. Sutley ......................................................................................................... 70 Mr. Kidd ............................................................................................................ 77 Ms. Robyn .......................................................................................................... 96 Mr. Pulcrano ..................................................................................................... 106 R E STILL (III) DI with D330-44585-7600 ph44585 on VerDate Nov 24 2008 11:12 Jan 05, 2011 Jkt 056839 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 P:\DOCS\56839.TXT SAFFAIRS PsN: PAT R E TILL S DI with D330-44585-7600 ph44585 on VerDate Nov 24 2008 11:12 Jan 05, 2011 Jkt 056839 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 P:\DOCS\56839.TXT SAFFAIRS PsN: PAT CUTTING THE FEDERAL GOVERNMENT’S ENERGY BILL: AN EXAMINATION OF THE SUSTAINABLE FEDERAL GOVERNMENT EXECUTIVE ORDER WEDNESDAY, JANUARY 27, 2010 U.S. SENATE, SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, FEDERAL SERVICES, AND INTERNATIONAL SECURITY, OF THE COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS, Washington, DC. The Subcommittee met, pursuant to notice, at 2:37 p.m., in room SD–342, Dirksen Senate Office Building, Hon. Thomas R. Carper, Chairman of the Subcommittee, presiding. Present: Senator Carper. OPENING STATEMENT OF SENATOR CARPER Senator CARPER. Good afternoon. The Subcommittee will come to order. My Republican colleagues are holding a one-day retreat off cam- pus, but they are not too far away. But some of them may be com- ing in and joining us later this afternoon, but they are in retreat today—not full retreat, but—— [Laughter.] And, I might add, we are not, either. But we like to do things in a bipartisan basis in this Subcommittee and that is our history. Hopefully, we will be able to continue to do that. I am very excited about this hearing. It is one of those things when I think you actually mix good policy and good politics. Like Rutherford B. Hayes used to say, good policy makes for good poli- tics, or something to that extent. We will see how this rolls, but we have a great panel of witnesses, and I am very excited about what you have to share with us. The last few years have underscored not only the need, but the opportunities for our Nation to rethink its energy use. Ever chang- ing energy costs and our Nation’s severe economic problems have resulted in families and homeowners and businesses and local gov- ernments and schools all taking a hard look at how much they are spending. As a recovering governor—that is me—I know what it is like to be responsible for coming up with a budget and living within its constraints. Within State government, you have to make sure that you balance your budget every year. You have to make some tough R TILLE (1) S DI with D330-44585-7600 ph44585 on VerDate Nov 24 2008 11:12 Jan 05, 2011 Jkt 056839 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 P:\DOCS\56839.TXT SAFFAIRS PsN: PAT 2 choices and look across government to find ways to do, in some cases, more with less. And the Federal Government should be no different, at least not remarkably different. Becoming more energy efficient is a clear way for the Federal Government not only to save money, but to also improve the quality of service that we provide to the American people. President Obama has recognized that the Federal Government can lead by example. In October, the President issued Executive Order 13514, calling for the Federal Government to step up its ef- forts to conserve energy by challenging agencies to meet a number of energy, water, and waste reduction targets. The Executive Order establishes a series of energy savings and other green government targets for the Federal Government. Each Federal agency is re- quired to develop plans to reach those targets, and we expect initial reports on the status of those plans sometime later this year. In the meantime, we should start a dialogue about what the Ex- ecutive Order means for not only our environment, but also for our Nation’s bottom line. This Subcommittee is always looking at the financial implications of new Federal ideas—sometimes old Federal ideas—and we have to explore some basic questions which I hope our witnesses will help us to do today, and among those basic ques- tions are these. Will the Executive Order save taxpayers’ money? What are the costs and potential rewards associated with investing in energy ef- ficiency or alternative energy strategies? Are there financial or bu- reaucratic challenges that Congress can address or at least help to address? In other words, if there are opportunities to save money through energy efficiency, why aren’t we moving more quickly? Is there something we can do about that? I should point out that we are talking here about not a little bit of money. Potentially, we are talking about a lot of money. And I should first note that the Federal Government is, I believe, the sin- gle largest energy user in the Nation, is that right? I see a nodding of heads. In fiscal year 2008, I am told the total energy consumption of the Federal Government in all of our buildings and operations was roughly 1.5 percent of all energy consumption in the United States. I wonder who is number two? The energy bill for the Federal Gov- ernment that year was almost $25 billion, $24.5 billion, or almost one percent of total Federal expenditures. Of that roughly $25 bil- lion, over $7 billion was spent on energy to operate Federal build- ings alone. With a price tag that large, there are significant oppor- tunities for savings of taxpayer dollars. During these times of mind-boggling budget deficits, the Federal Government needs to find every way it can to better manage its op- erations and finances, and we also need to find ways to put Ameri- cans back to work again. I would just sort of underscore or put an exclamation point at the end of those sentences. We ran up as much new deficit in our first 8 years in this decade as we did in the first roughly 208 years of our Nation’s history. And this last year, we are just coming off the heels of the largest single-year def- icit that we have ever had in our Nation’s history. As we look ahead, the red ink doesn’t get much better. We are R TILLE going to hear a lot, I think, tonight from the President about that, S DI with D330-44585-7600 ph44585 on VerDate Nov 24 2008 11:12 Jan 05, 2011 Jkt 056839 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 P:\DOCS\56839.TXT SAFFAIRS PsN: PAT 3 which is a good thing. We are also going to hear tonight, I am sure, in his State of the Union a fair amount of discussion on what we are doing to try to put Americans back to work and what we ought to be doing to put Americans back to work. I just had a very interesting meeting with the CEO of Cummins. They make a lot of products, this technology and manufacturing company. They figured out that it is possible to do good and to do well at the same time, to reduce emissions, to make more energy efficient products, and to sell them all over the world. At a time and age when a lot of workforces are shrinking, here is a company that has increased its workforce by more than a quarter, maybe close to 50 percent. So it is possible to do good and to do well. They are actually a pretty good poster child for that. Our Federal Government occupies, I am told, nearly 500,000 buildings of every shape and size, including buildings like this beautiful one that we are in today. We have more than, I am told, 1.8 million civilians and we purchase more than $500 billion per year in goods and services. The scope of these assets presents op- portunities for businesses and entrepreneurs to employ energy sav- ing products and services that will save taxpayers money and pro- vide a marketplace for innovation. So it is clear that we have an abundance of opportunities to lead by example in the Federal Government and that is what we need to do—lead. Today, we are blessed to have four very knowledgeable experts from the Federal Government—well, three, and one from sort of like a quasi-Federal Government entity, the Postal Service. But we have four very knowledgeable experts today with us to share some of their ideas on how we might provide the kind of leadership that is needed. The first two represent the overall picture of the Executive Order from the perspectives of the White House and the Department of Energy. The second two witnesses will describe the Executive Order from the perspective of a couple of very large entities, the Department of Defense and the U.S. Postal Service. Federal managers appear to want the Executive Order. A recent survey of Federal agency managers showed, I believe, two things. First, these managers say that green government ranks as high in importance as managing human capital and financial management. So managers see that taking steps like saving energy makes sense in a variety of ways. But second, more than half of the respondents to that survey said that creating a more green government requires more account- ability and clear measures of success. I understand that these are key goals of the Executive Order. Before I close, I must mention a piece of very relevant legislation that our full Committee Ranking Member Susan Collins introduced last year. I am pleased to be a cosponsor, in fact an original cospon- sor, of what is called the Federal Agency Energy Efficiency Im- provement Act of 2009, which has many of the same goals of the Executive Order, and I believe it is complementary to it. Our legis- lation has already been approved by the full Committee, the Senate Homeland Security Committee and Governmental Affairs. We look R TILLE forward to moving it through the full Senate. Although I will be S DI with D330-44585-7600 ph44585 on VerDate Nov 24 2008 11:12 Jan 05, 2011 Jkt 056839 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 P:\DOCS\56839.TXT SAFFAIRS PsN: PAT 4 honest with you. I can introduce a resolution today that says today is Wednesday. I am not sure I could get 60 votes for it in the U.S. Senate. Things are tough. [Laughter.] But having said that, Senator Collins and I, we team up on a lot of stuff, and maybe we can get this one into the end zone. I hope so. In the next few weeks, I plan on introducing legislation to ensure that the money the Federal Government spends on improving building efficiency is reaching its full potential. New technology de- mands new skills, I might add, and I have introduced a new bill that I think would better ensure that the individuals who manage our Federal facilities receive the training they need in order to meet these new demands. With that having been said, I think we are going to get under- way here. I am going to say a couple of words about each of our witnesses, not at any great length. I am just delighted that you are here, delighted that you have prepared for this. Our first witness is going to be Nancy Sutley. I was pleased to meet her here literally, I think, a year ago. She is the Chair of the President’s Council on Environmental Quality (CEQ), a position once held by former Delaware Governor Russell Peterson, who at the tender age of 92 is alive and going strong and doing great things for our environment and our State. But she is Chair of the President’s Council on Environmental Quality and works in the White House. She will discuss the Executive Order and what it means to the Federal Government and what it means for our Na- tion as a whole. The Council on Environmental Quality is a lead entity not only in designing the Executive Order, but also in its im- plementation. Our second witness is Richard Kidd. Mr. Kidd is the Program Manager of the Federal Energy Management Program residing in the Department of Energy. Mr. Kidd will discuss how agencies are responding to the Executive Order, what progress has been made, and what we can do to make even more progress in the future. Our next witness is Deputy Under Secretary Dorothy Robyn. She joins us from the Department of Defense. Ms. Robyn will discuss what progress the Department of Defense has made on the energy efficiency front. Far and away the largest consumer of energy in the Federal Government, the Department of Defense will provide clear examples of the challenges that agencies face in pursuing these goals. Currently, the Department of Defense accounts for, I am told, almost two-thirds of the energy consumed by Federal fa- cilities and buildings. Our final witness is Sam Pulcrano, Vice President of Sustain- ability for the U.S. Postal Service. Mr. Pulcrano will discuss how the Postal Service long ago understood the business case for invest- ing in energy efficiency for their operations. We just had a chance to meet yesterday with the Postmaster General. We talked about some of these issues. The Postal Service has been a real leader in this area, and by his position’s very existence, Mr. Pulcrano has proven that the Postal Service understands the value of making en- ergy efficiency a part of their everyday business. We thank all the witnesses for being with us today. We will R TILLE begin on the left, if we could, with Ms. Sutley. Your entire state- S DI with D330-44585-7600 ph44585 on VerDate Nov 24 2008 11:12 Jan 05, 2011 Jkt 056839 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 P:\DOCS\56839.TXT SAFFAIRS PsN: PAT 5 ment will be made part of the record. In fact, I have read your oral statement and it will probably fit within 5 minutes, but if you take more than 5 minutes, 6 or 7 minutes, that is OK. Then we will come back and do questions once everybody is finished with their testimony. Again, we are delighted you are all here. This is an im- portant issue. Thanks for joining us. Ms. Sutley. TESTIMONY OF NANCY SUTLEY,1CHAIR, COUNCIL ON ENVIRONMENTAL QUALITY Ms. SUTLEY. Thank you, Mr. Chairman, for holding this hearing and the opportunity to appear before you and the interest and en- thusiasm the Subcommittee has for this issue. I will apologize up front. I am getting over a cold, so hopefully, I won’t start coughing in the middle of this. As you pointed out, the Federal Government is the single largest energy consumer in the United States. It owns more than 500,000 buildings, more than 600,000 vehicles, and purchases more than $500 billion a year in goods and services. Given this impact and scope, the President recognizes that the Federal Government must be a leader in sustainability and in our efforts to build a clean en- ergy economy. Cutting the Federal Government’s energy use will not only reduce our carbon footprint, but will also save taxpayers’ dollars. President Obama signed Executive Order 13514 on October 5 of last year. The Executive Order sets sustainability goals for Federal agencies and focuses on making improvements in environmental, energy, and economic performance. I would like to take this oppor- tunity to thank all the agencies for their hard work and enthu- siasm in implementing the goals of the Executive Order, including the agencies who are represented here today. Meeting these goals will reduce costs, reduce air and water pollution, and drive invest- ments in local and clean energy jobs. The goals and strategies Federal agencies are developing will be in harmony with existing statutory energy efficiency requirements, such as those in the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007. In fact, statutory require- ments such as metering and building recommissioning will help us meet these goals. In addition, the Executive Order for the first time requires Fed- eral agencies to set a greenhouse gas pollution reduction target. The overall Federal Government-wide target will be the aggregate commitment of 35 Federal agencies. Achieving the reduction goal will be done through a combination of efforts, including becoming more energy efficient, reducing petroleum use in government fleets, and using more renewable energy. The investments made by Federal agencies will pay dividends for years to come in taxpayer savings. For example, achieving a 5 per- cent reduction in greenhouse gas emissions by 2020 from the cur- rent baseline would save an estimated $1.7 to $2.1 billion in avoid- ed energy costs. R TILLE 1The prepared statement of Ms. Sutley appears in the Appendix on page 38. S DI with D330-44585-7600 ph44585 on VerDate Nov 24 2008 11:12 Jan 05, 2011 Jkt 056839 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 P:\DOCS\56839.TXT SAFFAIRS PsN: PAT 6 Agencies are working towards achieving their targets by pur- suing a number of strategies. These projects, many of which were made possible by Recovery Act funding, will drive long-term sav- ings, build local market capacity, and create new private sector clean energy jobs. We know that inefficient energy use in buildings is a major con- tributor to Federal greenhouse gas emissions. Federal buildings provide significant opportunities for reducing emissions, and the ef- fort is bolstered by the $5.5 billion provided in the Recovery Act to the General Services Administration (GSA) to renovate and build high-performance green Federal buildings. Looking forward, implementation of the Executive Order will focus on integrating achievement of sustainability goals with agen- cy mission and strategic planning. The goal is to optimize perform- ance and minimize costs. Detailed agency implementation plans are due in June 2010, when each Federal agency will deliver a strategic sustainability performance plan to CEQ and the Office of Management and Budget (OMB). Each plan will prioritize the agency’s action toward the goals of the Executive Order based on the return on investment. These sustainability plans will describe the specific actions agencies will take to achieve their individual greenhouse gas reduction targets, reduce energy costs, and meet other goals of the Executive Order. Finally, to ensure accountability, annual agency progress will be measured and reported online to the public by OMB through its scorecard process. By fulfilling this Executive Order, the Federal Government will demonstrate that economic performance and a healthy environment go hand in hand. Thank you again for the opportunity to be here today and I look forward to your questions. Thank you. Senator CARPER. Thank you, Ms. Sutley, very much, for your leadership, as well. Mr. Kidd, welcome. TESTIMONY OF RICHARD KIDD,1 PROGRAM MANAGER, FED- ERAL ENERGY MANAGEMENT PROGRAM, U.S. DEPARTMENT OF ENERGY Mr. KIDD. Thank you. Good afternoon, Chairman Carper. We at Federal Energy Management Program are responsible for facili- tating the Federal Government’s implementation of sound, cost-ef- fective energy management and investment practices in order to enhance the Nation’s security and environmental stewardship. Today, we are examining Presidential Executive Order 13514, which establishes greenhouse gas emissions reduction as the over- arching metric to guide Federal actions and investments. The most cost-effective way to achieve these reductions is through increased use of energy efficiency technologies applied in a whole system, sustainable manner. Not using energy is cheaper than buying energy, and the Federal Government, as the largest energy consumer in the country, buys a lot of energy—$25 billion worth in 2008. Of this amount, $7 billion was for energy costs in buildings, with associated greenhouse gas emissions of over 43 mil- lion metric tons of carbon dioxide equivalent. R TILLE 1The prepared statement of Mr. Kidd appears in the Appendix on page 41. S DI with D330-44585-7600 ph44585 on VerDate Nov 24 2008 11:12 Jan 05, 2011 Jkt 056839 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 P:\DOCS\56839.TXT SAFFAIRS PsN: PAT