Public Sector Leadership: Government Purchasing of Energy-efficient Products to Save Energy and “Pull” the Market

In most countries, government spending represents between 10% and 25% of total economic activity, with the national government generally accounting for the largest portion. Consequently, governments' spending can exert a strong influence on the markets for the products and services they purchase, especially when this procurement is concerted. In the last decade, several governments have instituted programs designed to direct their purchasing of energy-using products to the more efficient models on the market. This has two impacts: It provides substantial direct savings to the government on its utility bills while also helping to increase the availability and lower the prices of these more efficient models for all buyers.

However, determining which products are efficient and communicating that to buyers is not a simple task. Two approaches — identifying complying product efficiency cut-off levels and utilizing existing "endorsement" labeling programs (such as Energy Star) — have been successful. The first has the advantage of providing greater control for program designers while the latter offers simpler product identification for buyers.

This paper focuses on the design and development of these government purchasing programs, with reference to the United States' and other countries' initiatives. Issues addressed include: deciding whether it is feasible to embark on such a program (since success hinges on certain precursor conditions vis a vis product efficiency testing and information availability); determining which product types should be covered to optimize savings; setting product efficiency specifications (such that purchasers will realize considerable energy savings without paying excessive purchase prices); establishing the political and technical support to ensure recommended products are really purchased; disseminating the information to the specifiers and purchasers who actually determine what gets procured; and estimating savings potential from these programs.

The paper contends that an energy-efficient purchasing program can be an extremely worthwhile component of a governmental energy management strategy, but requires technical and political attention to succeed.