Audit Finds Vulnerability of EnergyStar Program
BY MATTHEW L. WALD
Published: March 25, 2010
NYT
WASHINGTON — Does a “gasoline-powered alarm clock” qualify for the EnergyStar label, the government stamp of approval for an energy-saving product?
Like more than a dozen other bogus products submitted for approval since last June by Congressional auditors posing as companies, it easily secured the label, according to a Congressional report to be issued Friday. So did an “air purifier” that was essentially an electric space heater with a feather duster pasted on top, the Government Accountability Office said.
In a nine-month study, four fictitious companies invented by the accountability office also sought EnergyStar status for some conventional devices like dehumidifiers and heat pump models that existed only on paper. The fake companies submitted data indicating that the models consumed 20 percent less energy than even the most efficient ones on the market. Yet those applications were mostly approved without a challenge or even questions, the report said.
Auditors concluded that the EnergyStar program was highly vulnerable to fraud.
Maria Vargas, an official with the Environmental Protection Agency, which runs the program with the Energy Department, said the approvals did not pose a problem for consumers because the products never existed. There was “no fraud,” Ms. Vargas emphasized. She said she doubted that many of the 40,000 genuine products with EnergyStar status had been mislabeled.
But in anticipation of the report’s release, the Energy Department has issued two statements in recent days pledging to strengthen the program.
Yet auditors found problems beyond the approval of nonexistent products. They determined that once a company registered as an EnergyStar partner, it could download the logo from the government’s Web site and paste it on products for which it had not even requested approval.
The report is only the latest in a series involving the 18-year-old EnergyStar program, which was set up to guide the public on energy-efficient choices that could both save people money and help reduce the nation’s runaway energy consumption.
Watchdogs within the Environment Protection Agency and the Department of Energy have reported in the past that Energy Star has taken some claims of energy efficiency on faith. Yet the new study suggests that it often does so on remote control.
Congressional auditors said they were told by EnergyStar officials that some of the approvals, including the one for the gasoline alarm clock, had been issued by an automated system and that the details had probably never been reviewed by a human being.
Ms. Vargas added that the automated system that green-lighted the clock was only a preliminary “screen” to evaluate energy figures submitted by manufacturers and to cut out products that did not qualify. Every product that is certified is reviewed by a human being, she said.
But Senator Susan Collins, Republican of Maine, who requested the accountability office study, said in an interview, “I don’t think I’d admit that.”
If a government employee or contractor examined the comical picture submitted of the space heater with a feather duster, or read the description of the gas-powered clock — with dimensions suggesting it was the size of an electric generator — “and red flags didn’t get raised, that’s a really troubling commentary,” Ms. Collins said.
She said the ease with which the auditors had fooled the program suggested that consumers and agencies that rely on the logo were paying extra for products that might not actually save energy. “This program is extraordinarily easy to defraud,” she said.
Ms. Collins also noted that the economic stimulus bill included hundreds of millions of dollars in tax breaks for people who buy EnergyStar products and that many government agencies were required to choose EnergyStar products if they were available.
In effect, people “are ripped off twice,” as consumers and as taxpayers, she said.
Previous reports have suggested that the EnergyStar label is not always a complete or useful guide to the best consumer choices. Last October, for example, the inspector general of the E.P.A. said that 100 percent of the computer monitors that carried the EnergyStar logo had indeed met requirements. But so did 80 percent of the monitors that did not have the logo; the manufacturers had apparently not sought approval. For computer printers, 95 percent of the ones with the logo qualified, but so did 60 percent of the ones that did not have the logo.
And some consumer products lacking EnergyStar approval consumed less energy than those that had it, the audit found.
And the inspector general of the Energy Department reported the same month that EnergyStar claims were not “accurate or verifiable” for many products. The program requires manufacturers of windows and fluorescent lights to get their products certified by independent laboratories. But companies that make refrigerators, washing machines, dishwashers, water heaters and room air-conditioners, in which efficiency is far more critical because they gobble more energy, need only check a box on a form to be certified.
The Energy Department has promised to set up a system of independent verification for all products. Last week, it said it would begin testing refrigerators, freezers, clothes washers, dishwashers, water heaters and room air-conditioners. In October 2008, Consumer Reports magazine reported it had tested refrigerators built by LG of South Korea and found that they were not nearly as efficient as the maker claimed. LG eventually agreed to modify the machines already sold to reduce electricity consumption and to reimburse customers. Last week, the Energy Department said it had found a Samsung refrigerator that did not comply.
The Energy Department does spot check some items with the EnergyStar logo, but mostly the ones that do not use much power in the first place. The department recently announced that several models of compact fluorescent lamps would have to remove the EnergyStar logo because they were not durable enough. It has conducted spot checks on regulated appliances that do not carry the logo and determined that some cannot be legally sold because they do not meet minimum efficiency standards.
The audit to be released Friday did not set out to test any products but focused solely on testing the certification process by submitting bogus products.
Gene Rodrigues, the director of customer energy efficiency at Southern California Edison, suggested that the EnergyStar label suffered from its appeal to manufacturers. “It may be that their ability to properly manage the brand suffered at the fringes,” he said of the program’s overseers.
He argues that a strong federal certification program is vital. “What we in the program industry are looking for is for this to be a wake-up call to whip them into shape,” he said.
In another sign that Energy Star is not dotting its i’s, program officials told the auditors that they sought to assure honesty by warning corporate applicants on some of its paperwork that intentionally submitting false information is a crime, under Title 18 of the United States Code.
But it is a crime under Title 19, not 18, and the warning does not appear on all of the relevant forms, the report said.
Friday, March 26, 2010
Friday, March 12, 2010
How to go after a greenwasher
Michelle Gabriel attended, "Clean, Green, & Candid: Environmental Issues Every General Counsel (GC) Should Know" at Morrison and Foerster. Excellent info. Greenwashing was discussed in detail. What I learned:
1. The FTC is putting out new guidelines on Greenwashing.
2. If companies see it in their competitors they complain to the NAD. At the talk they described this as the National Advertising Division. I have looked this up and it is a devision of the Better Business Bureau. http://www.nadreview.org/. It's a very interesting page - you can see their press releases of their latest reviews of advertising claims that are being challenged.
3. Corporate counsel sees this as a large risk area for the company and in some companies are with the product development team and working with marketing early on to avoid issues. Most often they are gate keepers - saying no to products just about to go out. But now they are becoming more proactive and fixing it early on rather than spend a lot of money later.
4. Class action suits have been few but there will be more. I wish I learned more about this - as I am not a lawyer this was the really good stuff. But it was a short panel discussion. The only case mentioned was one where a company created it's own certification and a label for it's products, which was misleading.
5. I asked about companies using a logo to show a certification that they did not earn. The lawyer I spoke to had not heard of any cases of that.
So in general, the government can't regulate and enforce, so industry is doing it themselves. As with the Walmart initiative. If successful, that will do more for sustainablity than the government will ever do.
Doing some after the talk research:
Here is an interesting article about how ineffective the FTC has been and also how many types of greenwashing are not covered by the FTC guidelines.
http://green.wikia.com/wiki/FTC_Regulation_of_Greenwashing
I see references about the Green Guides being updated in 2009 but I can't find any new guides.
Also in 2009 it looks like the FTC did go after a serious case, charging some big companies:
http://www.globalclimatelaw.com/2009/06/articles/environmental/
ftc-files-greenwashing-charges-against-three-companies-based-on-
ecofriendly-advertising-claims/
1. The FTC is putting out new guidelines on Greenwashing.
2. If companies see it in their competitors they complain to the NAD. At the talk they described this as the National Advertising Division. I have looked this up and it is a devision of the Better Business Bureau. http://www.nadreview.org/. It's a very interesting page - you can see their press releases of their latest reviews of advertising claims that are being challenged.
3. Corporate counsel sees this as a large risk area for the company and in some companies are with the product development team and working with marketing early on to avoid issues. Most often they are gate keepers - saying no to products just about to go out. But now they are becoming more proactive and fixing it early on rather than spend a lot of money later.
4. Class action suits have been few but there will be more. I wish I learned more about this - as I am not a lawyer this was the really good stuff. But it was a short panel discussion. The only case mentioned was one where a company created it's own certification and a label for it's products, which was misleading.
5. I asked about companies using a logo to show a certification that they did not earn. The lawyer I spoke to had not heard of any cases of that.
So in general, the government can't regulate and enforce, so industry is doing it themselves. As with the Walmart initiative. If successful, that will do more for sustainablity than the government will ever do.
Doing some after the talk research:
Here is an interesting article about how ineffective the FTC has been and also how many types of greenwashing are not covered by the FTC guidelines.
http://green.wikia.com/wiki/FTC_Regulation_of_Greenwashing
I see references about the Green Guides being updated in 2009 but I can't find any new guides.
Also in 2009 it looks like the FTC did go after a serious case, charging some big companies:
http://www.globalclimatelaw.com/2009/06/articles/environmental/
ftc-files-greenwashing-charges-against-three-companies-based-on-
ecofriendly-advertising-claims/
Energy Star - only as good as the user
Just because a product is labelled Energy Star doesn't mean you will see the savings unless you use the product correctly. I recently went to a symposium at BERC - Berkeley Energy Research Center. The super academic panel was discussing the energy efficiency at one of the engineering buildings. One of the professors went in at night and saw that all of the monitors were on, with the message - Cable unplugged - floating all over the screen. Using a simple kilowatt meter it became quickly apparent that they were not in hibernate mode. It appears that the students turned off their computers, expecting the monitors to go off, but they went into a mode showing there was a problem and were running at full power. But, one of the profs commented, we bought Energy Star!!!
After the talk I went to a poster session at Soda Hall. The conference room has a wall of windows - good day lighting. All the lights along the windows were on. There was a bank of 5 controls for lighting by the door, each labelled with what zone they controlled. The person running the event wasn't aware there was an issue or a way to control it.
This is a problem seen over and over again at talks that I go to.
First, a product is purchased and installed or used with no check that it is actually performing the energy savings it was bought for. Automated systems and commissioning are supposed to stop this problem in large buildings. What about the rest of us? Sustainable Spaces/Recurve is working in what I would call the commissioning of residential HVAC - examples - you get insulation in your attic and get a tax credit. But was it properly installed and is it really doing anything? Most likely, either no or not all it could do.
Second, the user does not know or is even aware of the proper use of the product to realize the energy savings. Just in a few hours I saw/heard 2 examples! I find this one to be a much tougher issue. It's training, organizational knowledge of a very transient population.
After the talk I went to a poster session at Soda Hall. The conference room has a wall of windows - good day lighting. All the lights along the windows were on. There was a bank of 5 controls for lighting by the door, each labelled with what zone they controlled. The person running the event wasn't aware there was an issue or a way to control it.
This is a problem seen over and over again at talks that I go to.
First, a product is purchased and installed or used with no check that it is actually performing the energy savings it was bought for. Automated systems and commissioning are supposed to stop this problem in large buildings. What about the rest of us? Sustainable Spaces/Recurve is working in what I would call the commissioning of residential HVAC - examples - you get insulation in your attic and get a tax credit. But was it properly installed and is it really doing anything? Most likely, either no or not all it could do.
Second, the user does not know or is even aware of the proper use of the product to realize the energy savings. Just in a few hours I saw/heard 2 examples! I find this one to be a much tougher issue. It's training, organizational knowledge of a very transient population.
Energy Star - can be greenwashing
From the talks I have been going to in the last 2 months, I learned that Energy Star has no 3rd party certification and their labs don't check appliances!!! Companies self declare! Energy Star itself doesn't even check them. Looks like things are going to change - not soon enough.
Here is an article on it from the NYT:
http://www.nytimes.com/2009/10/19/business/energy-environment/19star.html
WASHINGTON — The Energy Department has concluded in an internal audit that it does not properly track whether manufacturers that give their appliances an Energy Star label have met the required specifications for energy efficiency.
Skip to next paragraph
Carolyn Kaster/Associated Press
An agency audit also criticized the number of compact fluorescent lights approved.
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Some manufacturers could therefore be putting the stickers on unqualified products, according to the audit, by the Energy Department’s inspector general, Gregory H. Friedman.
The Energy Star program, jointly managed by the Energy Department and the Environmental Protection Agency, has benefited from a renewed emphasis by the Obama administration, as a mechanism for reducing the waste of energy and curbing resulting greenhouse gas emissions. Under the federal stimulus bill, $300 million will go to rebates for consumers who buy Energy Star products.
Some consumers choose energy-efficient appliances for the same reason they might choose a car with good fuel economy: to save money or reduce the environmental impact.
Teams from the Energy Department and the E.P.A. oversee different categories of products. Last December, the environmental agency’s inspector general said the Energy Star ratings for products it oversees, like computers and television sets, were “not accurate or verifiable” because of weak oversight by the agency.
The Energy Department vowed then to scrutinize its performance in evaluating the products that it oversees, like windows, dishwashers, washing machines and refrigerators.
The new audit, a copy of which was obtained by The New York Times, indicates that the Energy Department has also fallen far short. Those shortcomings “could reduce consumer confidence in the integrity of the Energy Star label,” according to the department’s inspector general. The audit is to be submitted to Energy Secretary Steven Chu this week. While the Energy Department requires manufacturers of windows and L.E.D. and fluorescent lighting to have independent laboratories evaluate their products, the report said, companies that make refrigerators, washing machines, dishwashers, water heaters and room air-conditioners, which consume far more energy, can certify those appliances themselves.
One refrigerator manufacturer tipped off the Energy Department that some models from a competitor that carried the Energy Star label did not meet the criteria, the audit said. That problem was also described by Consumer Reports magazine in October 2008 about tests it had conducted. In a settlement last year, the manufacturer, LG of South Korea, agreed to modify circuit boards in the machines already sold, to reduce their consumption and to compensate consumers for the extra power consumed.
The report also noted that while the government said in 2007 that it would conduct “retail assessments” to ensure that all the products carrying the Energy Star logo deserved them, it is still not doing so for windows, doors, skylights, water heaters and solid-state lighting. And the department is not following through to ensure that when inappropriately labeled products are identified, the labels are actually taken off, the audit said.
In one category, compact fluorescent lights, the government has certified nearly all existing products, the audit said. “When 90 percent of the products qualify, the consumer cannot easily judge the relative efficiencies of C.F.L. products,” the report said.
Jen Stutsman, an Energy Department spokeswoman, cited the recent agreement with the E.P.A., and said, “The Obama administration is strongly committed to ensuring that all Energy Star products provide American consumers with significant energy and cost savings, and has moved forward with steps to streamline and enhance the program.”
An outside expert, Lane Burt, the manager of building energy policy at the Natural Resources Defense Council, said some of the criticisms were justified.
“It’s been a tremendously successful program,” Mr. Burt said. “It’s grown by leaps and bounds, and any time you have that kind of growth, you’re going to have growing pains.”
Nonetheless, he said, “it’s crucial to make sure consumers are actually saving money and energy when buying an Energy Star appliance.” On Sept. 30, the Energy Department and the E.P.A. signed a memorandum of understanding that seeks to address some of the shortcomings detailed in the report.
Mr. Burt said the memorandum committed both agencies to having all of their products evaluated by certified independent laboratories, and to expand the Energy Star program to cover products that were not in common use when it began in 1996. No target date was set.
The memorandum called for a “super star” program within Energy Star to identify the top-performing 5 percent of products, ranked by efficiency, he said.
Here is an article on it from the NYT:
http://www.nytimes.com/2009/10/19/business/energy-environment/19star.html
WASHINGTON — The Energy Department has concluded in an internal audit that it does not properly track whether manufacturers that give their appliances an Energy Star label have met the required specifications for energy efficiency.
Skip to next paragraph
Carolyn Kaster/Associated Press
An agency audit also criticized the number of compact fluorescent lights approved.
green inc.
Green Inc.
A blog about energy, the environment and the bottom line.
Go to Blog »
Readers' Comments
Readers shared their thoughts on this article.
* Read All Comments (27) »
Some manufacturers could therefore be putting the stickers on unqualified products, according to the audit, by the Energy Department’s inspector general, Gregory H. Friedman.
The Energy Star program, jointly managed by the Energy Department and the Environmental Protection Agency, has benefited from a renewed emphasis by the Obama administration, as a mechanism for reducing the waste of energy and curbing resulting greenhouse gas emissions. Under the federal stimulus bill, $300 million will go to rebates for consumers who buy Energy Star products.
Some consumers choose energy-efficient appliances for the same reason they might choose a car with good fuel economy: to save money or reduce the environmental impact.
Teams from the Energy Department and the E.P.A. oversee different categories of products. Last December, the environmental agency’s inspector general said the Energy Star ratings for products it oversees, like computers and television sets, were “not accurate or verifiable” because of weak oversight by the agency.
The Energy Department vowed then to scrutinize its performance in evaluating the products that it oversees, like windows, dishwashers, washing machines and refrigerators.
The new audit, a copy of which was obtained by The New York Times, indicates that the Energy Department has also fallen far short. Those shortcomings “could reduce consumer confidence in the integrity of the Energy Star label,” according to the department’s inspector general. The audit is to be submitted to Energy Secretary Steven Chu this week. While the Energy Department requires manufacturers of windows and L.E.D. and fluorescent lighting to have independent laboratories evaluate their products, the report said, companies that make refrigerators, washing machines, dishwashers, water heaters and room air-conditioners, which consume far more energy, can certify those appliances themselves.
One refrigerator manufacturer tipped off the Energy Department that some models from a competitor that carried the Energy Star label did not meet the criteria, the audit said. That problem was also described by Consumer Reports magazine in October 2008 about tests it had conducted. In a settlement last year, the manufacturer, LG of South Korea, agreed to modify circuit boards in the machines already sold, to reduce their consumption and to compensate consumers for the extra power consumed.
The report also noted that while the government said in 2007 that it would conduct “retail assessments” to ensure that all the products carrying the Energy Star logo deserved them, it is still not doing so for windows, doors, skylights, water heaters and solid-state lighting. And the department is not following through to ensure that when inappropriately labeled products are identified, the labels are actually taken off, the audit said.
In one category, compact fluorescent lights, the government has certified nearly all existing products, the audit said. “When 90 percent of the products qualify, the consumer cannot easily judge the relative efficiencies of C.F.L. products,” the report said.
Jen Stutsman, an Energy Department spokeswoman, cited the recent agreement with the E.P.A., and said, “The Obama administration is strongly committed to ensuring that all Energy Star products provide American consumers with significant energy and cost savings, and has moved forward with steps to streamline and enhance the program.”
An outside expert, Lane Burt, the manager of building energy policy at the Natural Resources Defense Council, said some of the criticisms were justified.
“It’s been a tremendously successful program,” Mr. Burt said. “It’s grown by leaps and bounds, and any time you have that kind of growth, you’re going to have growing pains.”
Nonetheless, he said, “it’s crucial to make sure consumers are actually saving money and energy when buying an Energy Star appliance.” On Sept. 30, the Energy Department and the E.P.A. signed a memorandum of understanding that seeks to address some of the shortcomings detailed in the report.
Mr. Burt said the memorandum committed both agencies to having all of their products evaluated by certified independent laboratories, and to expand the Energy Star program to cover products that were not in common use when it began in 1996. No target date was set.
The memorandum called for a “super star” program within Energy Star to identify the top-performing 5 percent of products, ranked by efficiency, he said.
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