The U.S. government helps consumers select energy-efficient products by means of a little logo called the Energy Star. Surveys show that 70% of U.S. households recognize the symbol. This efficiency standard has helped lower the nation's utility bills by $61 billion over the past five years, according to the Web site EnergyStar.gov. That translates to a reduction of greenhouse gases equal to taking half the country's vehicles off the roads for one year.
There's just one problem: Consumer and environmental groups say it's often too easy for companies to win the right to display the star.
According to descriptions from the Department of Energy, which manages the Energy Star appliance program, the coveted logo should ideally appear on dishwashers, refrigerators, and other appliances that score in the top 25% for energy efficiency in their categories. But in 2007 some 60% of all dishwasher models on the market qualified, the DOE says. The year before, 92% of them hit the mark.
"If the DOE gives Energy Star to everyone, eventually it's worthless," says David B. Goldstein, a director at the Natural Resources Defense Council.
Energy Star is a voluntary program. The 25% goal is simply intended to make manufacturers strive harder to improve efficiency. As companies innovate, more products qualify every year. So for the program to work as planned, the DOE needs to raise the bar on a regular basis. But critics say the standards often go years without revision, easing pressure on companies to make improvements and inflating the number of products with the seal.
An Energy Star official at the DOE acknowledges that "high market saturation" is a risk. "We will take a very hard look" and consider toughening the standard, he says.
No Independent Audits
This past summer the nonprofit Consumers Union complained that some companies were gaming the system. Its testing labs discovered that two refrigerators-- one from Samsung and one from LG Electronics -- displayed the logos but only measured up if their icemakers were switched off. When the icemakers were on, the machines exceeded the power consumption stated on their Energy Star labels by 65% and by more than 100%, respectively.
"Consumers don't buy a fridge with this sort or feature to leave it off," says Steven Saltzman, a deputy editor at Consumer Reports.
It turned out that when the refrigerator rule was revised in 2001 and 2004, the icemaking feature was rare for this type of model, and there was no requirement to turn it on during the tests. Spokespeople from both LG and Samsung say the companies are in full compliance with DOE standards.
Critics also gripe that there is no independent auditor for appliance testing. The DOE can spot-check products, but it mainly relies on companies to test rivals' wares and to complain if something looks fishy. Such complaints are rare -- and it's not just consumers who suffer. Federal and state governments require the Energy Star for billions of dollars of purchases each year. Last month, Texas offered a statewide sales-tax-free day for Energy Star goods. If the mark loses credibility, that could weaken official efforts to improve efficiency.
In addition to managing the voluntary Energy Star standards, the DOE also sets mandatory federal efficiency rules that govern what can legally be sold. In 2003 a coalition of U.S. states and public-interest groups sued the department, saying its definition of the lowest acceptable efficiency for products in 20 categories were too lenient. In 2006 the plaintiffs won a consent decree that set clear timetables to update the efficiency tests and raised the bar for all products named in the suit. The DOE has met the schedule for updates, but plaintiffs have dragged the department back to court claiming the standards are still too weak.
The voluntary Energy Star standard wasn't drawn into the dispute, but critics say it now sits under the same cloud.
Adam Aston is Energy & Environment editor for BusinessWeek in New York .
Reprinted from the Oct. 2, 2008 edition of BusinessWeek.com by special permission
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