U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL 

Catalyst for Improving the Environment 

 Evaluation Report 

ENERGY STAR Label Needs to 

Assure Superior Energy 

Conservation Performance 

A Summary Report

 Report No. 11-P-0010 

 October 28, 2010
Report Contributors: Laurie Adams 

 Daniel Carroll 

 Jerri Dorsey 

 Jill Ferguson 

 Jeffrey Harris 

Abbreviations 

DOE U.S. Department of Energy 

EPA U.S. Environmental Protection Agency 

GAO U.S. Government Accountability Office 

GHG Greenhouse gas 

MMTCE Million metric tons of carbon equivalent 

MOU Memorandum of Understanding 

OIG Office of Inspector General 

Cover photos: Examples of ENERGY STAR product types. 

(Photos courtesy U.S. Department of Energy) 
 

11-P-0010 

October 28, 2010

Catalyst for Improving the Environment

Why We Did This Review

Since 2006, the U.S. 

Environmental Protection 

Agency (EPA) Office of 

Inspector General has 

conducted three evaluations 

of selected aspects of the 

ENERGY STAR program. 

This report summarizes past 

findings that remain relevant 

and identifies design and 

management challenges that 

present risks to the program’s 

integrity as a means of 

greenhouse gas avoidance and 

as a credible tool to promote 

energy efficiency and 

consumer savings. 

Background

ENERGY STAR is a 

voluntary program designed to 

help businesses and 

individuals enhance their 

energy efficiency. In 1996, 

EPA partnered with the U.S. 

Department of Energy (DOE) 

to promote the ENERGY 

STAR label and broaden the 

product coverage. 

For further information, 

contact our Office of 

Congressional, Public Affairs 

and Management at 

(202) 566-2391. 

To view the full report, 

click on the following link: 

www.epa.gov/oig/reports/2011/

20101028-11-P-0010.pdf

 

ENERGY STAR Label Needs to Assure 

Superior Energy Conservation Performance 

 What We Found

EPA’s implementation of the ENERGY STAR program has become inconsistent 

with the program’s authorized purpose: to achieve environmental benefits by 

identifying and promoting energy-efficient products and practices that meet the 

highest energy conservation standards. We believe the ENERGY STAR program 

has sought to maximize the number of qualified products available at the expense 

of identifying products and practices that maximize energy efficiency. 

We previously found that EPA could not assure that the purchase of ENERGY 

STAR products and adoption of ENERGY STAR practices actually deliver the 

energy or greenhouse gas emission savings that EPA reports annually, or that 

consumers are purchasing the most energy-efficient products on the market. We 

found that the design and execution of the ENERGY STAR program ensured 

neither the integrity of the label nor the achievement of greenhouse gas emission 

savings. Products historically qualified for the ENERGY STAR label based on 

manufacturer self-certification rather than EPA testing. 

In 2009, EPA and DOE signed a new memorandum of understanding to enhance 

and expand federal programs that advance energy efficiency. These enhancements 

include adding new product categories to the program, instituting new measures 

to ensure that ENERGY STAR specifications are tightened as necessary to 

consistently represent top performing products, and enhancing the qualification 

and verification testing of ENERGY STAR products. Because these changes have 

not yet occurred, their effectiveness remains to be determined. 

 What We Recommend

We recommend that the Assistant Administrator for Air and Radiation develop a 

strategic vision and program design that assures that the ENERGY STAR label 

represents superior energy conservation performance. We also recommend that 

the Assistant Administrator for Air and Radiation develop a set of goals and valid 

and reliable measures that can accurately inform shareholders and the public of 

the benefits of the program. EPA disagreed with many of our conclusions, but 

concurred with the proposed recommendations. Based on the Agency’s comments 

to our draft report, we changed our first recommendation to assure that the 

Agency’s strategic vision and design complies with the intent of the Energy 

Policy Act of 2005. 

U.S. Environmental Protection Agency 

Office of Inspector General 

At a Glance
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460

THE INSPECTOR GENERAL

October 28, 2010 

MEMORANDUM

SUBJECT: ENERGY STAR Label Needs to Assure Superior 

Energy Conservation Performance 

 Report No. 11-P-0010 

FROM: Arthur A. Elkins, Jr. Mark Bialek for

 Inspector General 

TO: Gina McCarthy 

 Assistant Administrator for Air and Radiation 

This is our report on the subject evaluation conducted by the Office of Inspector General (OIG) 

of the U.S. Environmental Protection Agency (EPA). This report contains findings that describe 

the problems the OIG has identified and corrective actions the OIG recommends. This report 

represents the opinion of the OIG and does not necessarily represent the final EPA position. 

Final determinations on matters in this report will be made by EPA managers in accordance with 

established resolution procedures. 

The estimated cost of this report – calculated by multiplying the project’s staff days by the 

applicable daily full cost billing rates in effect at the time – is $194,733. 

Action Required 

In accordance with EPA Manual 2750, you are required to provide a written response to this 

report within 90 calendar days. Your response will be posted on the OIG’s public Website, along 

with our comments on your response. Your response should be provided in an Adobe PDF file 

that complies with the accessibility requirements of section 508 of the Rehabilitation Act of 

1973, as amended. If your response contains data that you do not want to be released to the 

public, you should identify the data for redaction. You should include a corrective actions plan 

for agreed-upon actions, including milestone dates. We have no objections to the further release 

of this report to the public. This report will be available at http://www.epa.gov/oig. 

If you or your staff have any questions, please contact Wade Najjum at 202-566-0832 or 

najjum.wade@epa.gov, or Jeffrey Harris at 202-566-0831 or harris.jeffrey@epa.gov.
ENERGY STAR Label Needs to Assure Superior 11-P-0010 

Energy Conservation Performance 

Table of Contents 

Purpose ............................................................................................................................. 1

ENERGY STAR’s Role in Promoting Energy Efficiency................................................ 2

EPA Plans to Improve Management Controls to Ensure ENERGY STAR Results .... 5

Management Controls for Setting Product Performance Specifications 

 Have Been Lacking ............................................................................................. 5 

Testing of ENERGY STAR Products by EPA Has Been Limited ............................... 6 

EPA Lacks Assurance that Reported GHG Emissions Avoided Are Valid................. 7 

ENERGY STAR Does Not Indentify and Promote Products and Practices that 

Meet the Highest Energy Conservation Standards........................................................ 10 

ENERGY STAR Specifications Have Not Necessarily Identified 

 Only Top Performers............................................................................................ 10 

Non-ENERGY STAR Product Performance Similar to ENERGY STAR 

 Product Performance .......................................................................................... 11 

Conclusions ............................................................................................................... 12 

Recommendations ..................................................................................................... 12 

Agency Comments and OIG Evaluation .................................................................... 12 

Status of Recommendations and Potential Monetary Benefits.................................... 14 

Appendices 

A Summaries of Prior EPA OIG, DOE OIG, and 

 U.S. Government Accountability Office Reports............................................. 15 

B Status of Corrective Actions for Prior EPA OIG Reports ............................... 18 

C Scope and Methodology.................................................................................... 22 

D Agency Comments (9/13/10) and OIG Evaluation ........................................... 23 

E Agency Comments (10/4/10) and OIG Evaluation ........................................... 28 

F Distribution ......................................................................................................... 32 
 11-P-0010 

Purpose 

Since 2006, the U.S. Environmental Protection Agency (EPA) Office of Inspector 

General (OIG) has conducted three evaluations of selected aspects of the ENERGY 

STAR program. These reports are: 

 ENERGY STAR Program Can Strengthen Controls Protecting the Integrity of 

the Label, Report No. 2007-P-00028, August 1, 2007. 

http://www.epa.gov/oig/reports/2007/20070801-2007-P-00028.pdf

 Improvements Needed to Validate Reported ENERGY STAR Benefits, 

Report No. 09-P-0061, December 17, 2008. 

http://www.epa.gov/oig/reports/2009/20081217-09-P-0061.pdf

 ENERGY STAR Program Integrity Can Be Enhanced Through Expanded 

Product Testing, Report No. 10-P-0040, November 30, 2009. 

http://www.epa.gov/oig/reports/2010/20091130-10-P-0040.pdf

These evaluations assessed elements of the program’s design and management that 

are essential for assuring that the program delivers what its label promises. 

Appendix A provides summaries of these three reports. 

Beginning with the first report, EPA has taken steps to address the OIG’s 

recommendations. Appendix B notes the status of corrective actions taken by the 

Agency in response to the prior three OIG reports. 

This report will summarize past findings that remain relevant, as well as identify 

design and management challenges that present risks to the program’s integrity as a 

source of greenhouse gas (GHG)1

 avoidance and as a credible tool to promote energy 

efficiency and consumer savings. Appendix C provides details on the scope and 

methodology for our current review. 

 

1

 Gases that trap heat in the atmosphere are often called greenhouse gases. Some GHGs, such as carbon dioxide, 

occur naturally and are emitted into the atmosphere through natural processes and human activities. Other GHGs are 

created and emitted solely through human activities. Many, but not all, human-activity sources of GHG emissions 

are expected to rise in the future. The increase in GHG emissions may be mitigated through the use of newer, 

cleaner technologies and other measures. Additionally, everyday choices about such things as commuting, housing, 

electricity use, and recycling can influence the amount of GHGs being emitted.

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ENERGY STAR’s Role in Promoting Energy Efficiency 

In 1992, EPA’s Office of Air and Radiation established the ENERGY STAR Product 

Labeling Program as an innovative approach to environmental protection. Congress 

formally authorized the ENERGY STAR program in the Energy Policy Act of 2005.2

 

ENERGY STAR is a voluntary program designed to help businesses and individuals 

protect the environment through superior energy efficiency. By identifying energyefficient products and practices, the ENERGY STAR label is intended to help the 

public save money and protect the environment. 

According to EPA, the ENERGY STAR program has helped drive investment in 

energy-efficient products, technologies, and practices that surpass existing standards 

and building codes. The program uses an assortment of strategies to “catalyze market 

transformation.” The Agency further asserts that consumers, homeowners, and 

businesses rely on the ENERGY STAR program as a trusted source of unbiased 

information to help lower their energy bills while fighting global climate change. 

The ENERGY STAR program was first introduced to recognize and promote energyefficient computers. It has since grown to cover many consumer products and 

services. In 1996, EPA partnered with the U.S. Department of Energy (DOE) to 

promote the ENERGY STAR label and broaden the product coverage.3

 By 2008, the 

program included more than 40,000 ENERGY STAR-qualified product models 

across 60 product categories, which were produced by more than 2,400 

manufacturers. 

The ENERGY STAR program has four primary program sectors: 

 

 Products 

 Commercial 

 Industrial 

 Residential 

Table 1 provides descriptions for each sector and also notes the GHG emissions that 

were avoided for each sector in 2008. 

 

2

 Public Law 109-58, August 8, 2005; Subtitle C—Energy Efficient Products, Sec. 131. 3

 A memorandum of cooperation was signed jointly on May 29, 1996. The memorandum described each agency’s 

responsibilities as they relate to using and overseeing the ENERGY STAR logo. On September 29, 2009, DOE and 

EPA signed a memorandum of understanding to better define the roles of each agency and to outline new provisions 

to advance energy efficiency. 

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Table 1: ENERGY STAR Program Sector Descriptions

ENERGY STAR 

Program Sector Program Sector Description 

2008 GHG 

Emissions 

Avoided 

(MMTCE)*

Product 

Designed to promote energy-efficient products for 

purchase by consumers. Features the ENERGY 

STAR label. 

19.4 

Commercial 

Designed to promote superior corporate energy 

management approaches and provide partners 

with guidance on assessing current energy use 

and developing plans that will lead to energy 

reductions. 

18.5 

Industrial 

Designed to help industrial companies develop 

robust energy programs that create the necessary 

infrastructure for cost-effective GHG 

management. 

6.6 

Residential 

Designed to help make residential homes more 

energy efficient through existing home 

improvements and use of ENERGY STARqualified products in existing homes. 

0.5 

Source: OIG review of program materials. 

 * Million metric tons of carbon equivalent avoided as reported in the ENERGY STAR and 

 Other Climate Protection Partnerships 2008 Annual Report.

In 2008, the ENERGY STAR program reported avoiding a total of 45 MMTCE of 

GHG emissions. According to EPA, the program helped prevent GHG emissions 

equivalent to those from 29 million vehicles, while saving Americans nearly 

$18 billion on their energy bills. These reported benefits are more than double those 

claimed in 2000. 

The ENERGY STAR program is one of an array of federal partnerships and programs 

designed to promote opportunities to reduce GHG emissions. In 2002, President Bush 

announced a goal of reducing America’s GHG intensity4

 18 percent by 2012. 

Subsequently, in 2010, President Obama updated the goal to reduce the Federal 

Government’s GHG emissions by 28 percent by 2020. Several departments and 

agencies, including the U.S. Department of Transportation, DOE, and EPA, are 

working to reduce GHG emissions by improving energy efficiency, conserving fossil 

fuels, recovering methane, and sequestering carbon. 

EPA plays a significant role in the Federal Government’s agenda to reduce GHG 

emissions. In September 2009, the EPA Administrator finalized the mandatory 

regulation requiring the nation’s largest sources of GHGs to report their GHG 

emissions. This new rule is expected to allow EPA to track approximately 85 percent 

of total U.S. emissions while only requiring a small percentage of facilities to report 

 

4

 GHG intensity is the ratio of greenhouse gas emissions to economic output.

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data. In December 2009, the Administrator finalized the “endangerment finding,” 

which determined that GHGs contribute to the endangerment of public health and 

welfare. According to its strategic plan, EPA plans to reduce GHG intensity by 

enhancing partnerships with businesses and other sectors. 

EPA has several programs to address GHG reductions. The total contribution of all 

EPA programs is expected to satisfy 70 percent of the President’s GHG intensity 

reduction goal. While regulatory efforts are underway, the core of EPA’s climate 

change efforts are voluntary government/industry programs such as the ENERGY 

STAR program.5 According to the savings reported by the Agency, the ENERGY 

STAR program is EPA’s most significant GHG avoidance program and the largest 

single contributor to the U.S. national strategy. 

As illustrated in Figure 1, EPA’s annual reported GHG reductions have increased 

steadily since 2002, with the ENERGY STAR program consistently accounting for 

over 50 percent of EPA’s reported reductions. 

Figure 1: EPA GHG Emission Reductions

 Source: OIG analysis of ENERGY STAR program annual reports. 

 

5

 In 1992, the United States signed and Congress ratified the United Nations Framework Convention on Climate 

Change Treaty in Rio de Janeiro. The Rio Treaty requires the United States to implement programs to reduce GHG 

emissions. The United States decided to achieve this goal through voluntary programs. 

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EPA Plans to Improve Management Controls to 

Ensure ENERGY STAR Results 

We previously found that EPA could not assure that the purchase of ENERGY STAR 

products and adoption of ENERGY STAR practices actually deliver the energy or 

GHG emission savings EPA reports annually,6 or that consumers are purchasing the 

most energy-efficient products on the market. We found that the design and execution 

of the ENERGY STAR program ensures neither the integrity of the label nor the 

achievement of GHG emission savings. Products historically qualified for the 

ENERGY STAR label based on manufacturer self-certification rather than EPA 

testing.7 On September 30, 2009, EPA and DOE signed a new memorandum of 

understanding (MOU) to enhance and expand federal programs that advance energy 

efficiency. These planned enhancements include adding new product categories to the 

program, instituting new measures to ensure that ENERGY STAR specifications are 

tightened as necessary to consistently represent top performing products, and 

enhancing the qualification and verification testing of ENERGY STAR products. 

Because these changes have not yet occurred, their effectiveness remains to be 

determined. 

Management Controls for Setting Product Performance Specifications 

Have Been Lacking 

Traditionally, EPA set an initial performance specification for a product category and 

then monitored the product in the marketplace to determine when it was appropriate 

to begin revising each specification. The Agency has followed six key principles 

when establishing consumer product energy efficiency specifications: 

1. Significant energy savings can be realized on a national basis. 

2. Product performance can be maintained or enhanced with increased energy 

efficiency. 

3. Purchasers will recover their investment in increased energy efficiency within 

a reasonable time. 

4. Energy efficiency can be achieved with several technology options, at least 

one of which is nonproprietary. 

5. Product energy consumption and performance can be measured and verified 

with testing. 

6. Labeling would effectively differentiate products and be visible for 

purchasers. 

 

6

 EPA annually reports net savings on energy bills and GHG emissions avoided as reportable benefits of the 

program. 

7

 Companies self-certify that their products meet ENERGY STAR specifications. This process involves the 

manufacturer testing its product models per ENERGY STAR specifications and reporting the results to EPA. 

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Before EPA would set or revise a product specification, it would request input from 

manufacturers and other stakeholders. This input was used to determine the 

availability of new or advanced technologies and the level of interest in producing 

products under a new revised specification level, and to notify manufacturers of a 

pending revision. According to ENERGY STAR staff, this voluntary collaboration 

was an essential part of the process. We found that the criteria for initiating and 

revising specifications were unclear and were not documented. Because the Agency 

did not document the results of the specification-setting process, it is unclear how 

individual decisions regarding specifications revisions are made. 

According to EPA, several actions resulting from the MOU will address these historic 

shortcomings.8 The MOU also allows for more frequent revisions to existing 

ENERGY STAR specifications so that the label will continue to highlight the most 

energy-efficient products among manufacturers that volunteer to participate. EPA will 

conduct revisions on a preset timeline,9 and specifications will be set so that the 

ENERGY STAR logo is applied consistently with established program principles.

Testing of ENERGY STAR Products by EPA Has Been Limited 

Throughout the history of ENERGY STAR, qualified products have largely been 

untested by EPA. EPA relied on manufacturer self-certifications. EPA conducted only 

minimal verification testing and assumed that in a competitive market, manufacturers 

would test each other’s products and report failures to EPA. However, the Agency 

could not provide any examples as evidence that self-policing occurred.10 We found 

that EPA had not conducted any verification testing for the first 10 years of the 

program. When verification testing began, it accounted for only a small component of 

the program’s activities and budget. For example, in Fiscal Year 2006, the ENERGY 

STAR Product Labeling Program had an estimated $18.2 million budget, of which 

$70,000 was allocated for verification testing. In its first 5 years of verification 

testing, EPA averaged only two sets of product verification tests per year. When our 

2007 report was issued, 44,000 qualified product models existed within the qualified 

ENERGY STAR product categories. At the end of 2006, EPA had only conducted 

verification testing on 160 product models in 9 out of 48 product categories managed 

by EPA. 

 

8

 According to the May 7, 2010, DOE/EPA Partnership Work Plan, 21 actions are underway, 7 of which will be 

completed in 2010. 

9

 For product categories with longer-lived product model lifecycles (e.g., heating and cooling equipment and home 

appliances), specifications will be reviewed at least every 3 years or when the market share for ENERGY STARqualified products reaches about 35 percent. For product categories with rapidly evolving product models (e.g., 

consumer electronics and office equipment), specifications will be updated about every 2 years. 10 In response to a March 2010 U.S. Government Accountability Office report critical of ENERGY STAR’s lack of 

third-party testing, EPA continued to reiterate this position. EPA stated that for 18 years, manufacturers’ market 

incentive to test competitors’ products and report violations to EPA has been an effective quality control measure to 

ensure that consumers are getting products that cut energy costs and GHG emissions. 

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The recent MOU between DOE and EPA includes new testing and verification 

procedures. According to the MOU, verification of ENERGY STAR-qualifying 

products will be enhanced by the following: 

 All products will be required to be tested in an accredited laboratory and 

qualifying product information will be submitted to the government before the 

product can be qualified as ENERGY STAR. 

 Enhanced off-the-shelf product testing across all ENERGY STAR-covered 

product categories will be conducted by a combination of EPA/DOE testing, 

manufacturer funded EPA/DOE administered testing, or other third-party 

testing. 

EPA and DOE also plan to pursue product qualification prior to labeling, laboratory 

qualification, and comprehensive verification testing to ensure that ENERGY STAR 

remains a trusted symbol for environmental protection. According to EPA, the 

transition to independent testing for products not subject to a third-party certification 

program will be complete by November 30, 2010. Furthermore, all product categories 

will be subject to independent qualification testing by the end of 2010.11

EPA Lacks Assurance that Reported GHG Emissions Avoided Are 

Valid 

Based on control weaknesses identified in our previous evaluations, we conclude that 

EPA cannot be certain that its reported savings claims are valid or supportable, and 

that large amounts of GHG emissions are in fact being avoided. In October 2009, the 

DOE OIG reported similar findings, stating that these deficiencies could reduce 

consumer confidence in the integrity of the ENERGY STAR label.12 

 

A key assumption of the ENERGY STAR program is that the purchase and use of 

ENERGY STAR products and practices will save energy and lower GHG emissions. 

In 2008, EPA reported that ENERGY STAR benefits resulted in Americans saving 

about $18 billion on their utility bills, avoiding the need for about 190 billion kilowatt 

hours of electricity, and avoiding 45 million metric tons of GHG emissions. Reported 

ENERGY STAR benefits represented over 50 percent of EPA’s total GHG emissions 

avoided in 2006 and 2007; ENERGY STAR benefits are a major metric in EPA’s 

efforts to reduce these emissions. Therefore, the accuracy of the program’s reported 

ENERGY STAR savings is important in assessing EPA’s overall efforts to reduce 

GHG emissions. 

EPA computes the energy savings for each qualified ENERGY STAR product with a 

computer model. EPA used the formula shown in Figure 2 to calculate the annual 

 

11 EPA will be requiring products to be tested for qualification in an EPA-recognized, accredited laboratory, either 

through participation in a third-party certification program or through manufacturer-arranged testing in an accredited 

laboratory, and the resulting data must be shared with the ENERGY STAR program. 12 DOE OIG, The Department’s Management of the ENERGY STAR Program, DOE/IG-0827, October 14, 2009. 

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energy savings benefits and GHG reductions resulting from the ENERGY STAR 

program. 

Figure 2: ENERGY STAR Energy Savings Calculation 

 Source: OIG analysis of ENERGY STAR program material. 

Non-ENERGY STAR product energy consumption 

minus 

ENERGY STAR product minimum energy consumption 

multiplied by 

ENERGY STAR product sales 

equals 

ENERGY STAR Products’ Energy Savings 

A key number in the computation is the annual ENERGY STAR-qualified product 

shipment total by product category.13 In an earlier review, we reported that the 

ENERGY STAR program’s reported savings claims for products were inaccurate and 

that the reported annual savings were unreliable. We identified several deficiencies 

with the shipment data used in calculating benefits. Deficiencies included the lack of 

a data quality review, reliance on estimates, forecasting and unverified third-party 

reporting, and the potential inclusion of exported items. EPA also included savings 

from products that are no longer ENERGY STAR qualified in the benefits calculation 

formula.14 

 

Secondly, we determined through product testing that there may not be a distinction 

between the minimum energy consumption of ENERGY STAR products and the 

actual product energy consumption of non-ENERGY STAR products. The ENERGY 

STAR label is advertised as representing superior energy efficiency. However, our 

test of ENERGY STAR and non-ENERGY STAR products disclosed that some nonENERGY STAR products were more efficient. The ENERGY STAR specification 

was a minimum standard that 98 percent of qualified tested products met and many 

products exceeded.15 Additionally, many nonqualified products we tested also met or 

exceeded the specification. 

The performance results of the tested ENERGY STAR and non-ENERGY STAR 

products call into question the assumptions used to calculate energy savings and GHG 

reductions attributed to the program. If non-ENERGY STAR products are found to be 

at least as energy efficient as qualified ENERGY STAR products, then the energy and 

GHG savings reported by the Agency cannot be valid. 

 

13 The ENERGY STAR program uses the term “shipments” interchangeably with “sales.” When a qualified 

ENERGY STAR manufacturer ships its ENERGY STAR-qualified product, the shipment is considered sold for 

annual savings calculation purposes. 

14 This calculation is known as the market transformation benefit calculation. 

15 We tested 120 ENERGY STAR-qualified products and 118, or 98 percent, met program requirements for 

compliance. 

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Furthermore, the methodology used to compute the ENERGY STAR savings for the 

commercial sector was based on unverified assumptions and used formulas rather 

than actual program data. Based on reported 2006 program savings, the commercial 

component of the program was the second-largest contributor to carbon emissions 

avoided and nearly equaled the total benefits of the products component.16 EPA used 

a formula created, operated, and maintained by its contractor to compute the annual 

commercial sector savings. In this formula, the contractor (1) calculates all 

commercial sector gains in energy efficiency, (2) subtracts amounts from utility and 

State programs, and (3) concludes that the remaining energy savings can be attributed 

to the ENERGY STAR program. 

According to the Agency’s response to the draft report, the Agency is enhancing the 

way in which it accounts for program savings, including removing the market 

transformation effect, improving consistency, and reassessing the baseline of core 

products. Furthermore, according to EPA, a peer review of the program allocation 

methodology that EPA uses to estimate the program benefits in the commercial 

buildings market is currently underway. 

 

 

16 We excluded the residential and industrial program sectors from our review. The commercial and products sectors 

combined encompass 81.6 percent of the 2006 reported carbon emissions avoided. 

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ENERGY STAR Does Not Identify and Promote 

Products and Practices that Meet the Highest 

Energy Conservation Standards 

The Energy Policy Act of 2005 established ENERGY STAR as a voluntary program 

to identify and promote energy-efficient products and buildings. The goals of the 

program are to reduce energy consumption, improve energy security, and reduce 

pollution. These goals were to be achieved through voluntary labeling of, or other 

forms of communication about, products and buildings that meet the highest energy 

conservation standards. In contrast to the expectations set out in this Act, the 

ENERGY STAR program does not seek to achieve benefits by promoting products 

that meet the highest energy conservation standards. EPA’s emphasis on achieving 

the broadest number of ENERGY STAR transactions rather than identifying and 

promoting products with the highest efficiencies has led to results inconsistent with 

the intent of the Act. We have found historical instances in which the vast majority of 

products in the marketplace are ENERGY STAR qualified and instances in which 

ENERGY STAR qualified products were outperformed by some non-ENERGY 

STAR qualified products. 

ENERGY STAR Specifications Have Not Necessarily Identified Only 

Top Performers 

In the past, the ENERGY STAR label was intended to identify the top performers in 

energy efficiency. Agency documents state that specifications were designed to 

typically capture the top 25 percent of energy performing models on the market. 

However, we found that historically, specifications in some product categories were 

not revised in a timely manner, resulting in the majority of products in the 

marketplace being ENERGY STAR qualified. For example, prior to specification 

revisions, 98 percent of all computers, 95 percent of all monitors, 90 percent of all fax 

machines, and 99 percent of all mailing machines were ENERGY STAR qualified. In 

those product categories, the ENERGY STAR label did not identify superior energy 

efficiency over other products in the marketplace. Rather, it represented the lowest 

common standard of energy efficiency. If the majority of products in a certain 

category bear the ENERGY STAR label, ENERGY STAR becomes an inclusive

program. In such instances, the integrity of the label is diminished and credibility 

with consumers may decline. The inclusion of the majority of products in a category 

also raises questions about whether energy is actually saved if most products meet the 

ENERGY STAR specification. 

The media have reported such concerns. In October 2008, Consumer Reports opined 

that the qualifying standards for ENERGY STAR products were too lax. It found that 

92 percent of all dishwashers qualified as ENERGY STAR products. A February 23, 

2010, Washington Post article questioned both the reliability of the program label and 

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whether less-than-efficient appliances are making the cut. As reported in the 

Washington Post, in the past the ENERGY STAR label was “rather exclusive,” but 

now it is difficult to find appliances in some categories that are not ENERGY STAR 

certified. As stated in the Consumer Reports article, “It makes the EnergyStar worth a 

little less to the consumer if it’s something everybody’s got.” 

EPA has stated that, “. . . the ENERGY STAR program achieves significant results by 

delivering high efficiency to a large segment of consumers rather than targeting the 

most efficient products which would appeal to a much more limited set of 

purchasers.” The inclusive design and implementation of the program was reinforced 

when EPA stated in its response to the draft report on September 13, 2010, “Based on 

expert advice and experience in terms of what makes a consumer label effective, the 

ENERGY STAR products program has not and does not seek to achieve 

environmental benefits by promoting products that meet the highest energy 

conservation standards. Rather, the program operates under the principle that the 

greatest environmental impact can be achieved by affecting the broadest number of 

transactions, namely the purchases of the average consumer, who will choose 

products that are good for the environment as long as they don’t cost more or involve 

a sacrifice in performance.” 

We see this as a departure from the intent of the Energy Policy Act of 2005, which 

authorized EPA to “. . . identify and promote energy-efficient products and buildings 

in order to reduce energy consumption, improve energy security, and reduce pollution 

through voluntary labeling of, or other forms of communication about, products and 

buildings that meet the highest energy conservation standards” (emphasis added). 

Competing visions of the ENERGY STAR program within EPA were evident in its 

October 4, 2010, comments that stated, “The goal of the ENERGY STAR products 

program is to identify and promote energy-efficient products in order to reduce 

energy consumption, improve energy security, and reduce pollution through 

voluntary labeling of products that meet the highest energy conservation standards as 

authorized under the Energy Policy Act of 2005 and the Clean Air Act Section 

103(g).” The OIG sees these conflicting statements as evidence of a need for strategic 

vision and program design for an exclusive program that assures that the ENERGY 

STAR label represents superior energy conservation performance to the consumer. 

Non-ENERGY STAR Product Performance Similar to ENERGY STAR 

Product Performance 

According to EPA, the ENERGY STAR label enables consumers to easily identify 

energy-efficient products in the market. However, manufacturer participation in the 

program is voluntary, and the ENERGY STAR specification is a minimum standard. 

In 2009, we tested ENERGY STAR and non-ENERGY STAR products and found 

that products not labeled as ENERGY STAR met or exceeded the ENERGY STAR 

performance level. These results call into question the ability of the program to 

identify products with superior energy efficiency. If the program cannot identify 

11 
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products with superior energy efficiency, it cannot assure purchasers that they will 

recover their investment within a reasonable period of time in increased energy 

efficiency through utility bill savings. Consequently, the ENERGY STAR 

designation only identifies products from voluntary partners that self-report that the 

products meet the minimum standard; it does not necessarily identify the bestperforming products in the marketplace. 

The level of product performance affects the ENERGY STAR label’s image as a 

trusted national symbol for environmental protection through superior energy 

efficiency. If non-ENERGY STAR-labeled products consume the same or less energy 

than ENERGY STAR-qualified products, the value of the label is diminished. 

Therefore, EPA cannot currently be certain ENERGY STAR products are a good 

choice for the consumers looking for energy efficiency or cost effectiveness. 

Moreover, the basis for energy savings or GHG reductions claims is questionable. 

Conclusions 

We believe the ENERGY STAR program has sought to maximize the number of 

transactions of qualified products at the expense of identifying products and practices 

that maximize energy efficiency. We believe this is because the ENERGY STAR 

program’s design has become inconsistent with the intended outcomes. Although the 

program delivers the message to the consumer that the ENERGY STAR label 

designates cost-effective, energy-efficient products, this may not be the case. The 

program is currently taking steps to enhance program management. However, the 

integrity of the label remains at risk because it does not necessarily identify and 

promote the most energy-efficient products on the market. Agency management 

should assure that the program complies with the intent of Energy Policy Act of 2005 

and redesign the program accordingly. 

Recommendations 

We recommend that the Assistant Administrator for Air and Radiation: 

1. Develop a strategic vision and program design that assures that the ENERGY 

STAR label represents superior energy conservation performance. 

2. Develop a set of goals and valid and reliable measures that can accurately 

inform shareholders and the public of the benefits of the program. 

Agency Comments and OIG Evaluation 

The Agency agreed with our draft report’s recommendations, but did not concur 

with the summary findings. While the Agency concurred with our 

recommendations, it is not clear how EPA’s ENERGY STAR program as 

described meets the intent of the Energy Policy Act of 2005. The Act sets out that 

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13 

products in the ENERGY STAR program should meet “the highest energy 

conservation standards,” which should result in a more exclusive program. Based 

on the Agency’s comments to the draft report, we changed our first 

recommendation to assure that the Agency’s strategic vision and design complies 

with the intent of the Act. 

Subsequent to the exit meeting, wherein we discussed the OIG’s conclusion that 

ENERGY STAR’s vision and design should be more exclusive, the Agency 

provided a revised second response. 

In its initial response, the Agency stated, 

. . . the ENERGY STAR products program has not and does not 

seek to achieve environmental benefits by promoting products that 

meet the highest energy conservation standards. Rather, the 

program operates under the principle that the greatest 

environmental impact can be achieved by affecting the broadest 

number of transactions. . . . 

However, the Agency’s second response claimed that the program had an 

exclusive goal: 

. . . to identify and promote energy-efficient products in order to 

reduce energy consumption, improve energy security, and reduce 

pollution through voluntary labeling of products that meet the 

highest energy conservation standards. . . . 

These divergent responses, along with the recent program shortcomings 

summarized in the report, reinforce the OIG’s concern that the program direction 

is inconsistent. 

The planned programmatic improvements described in the MOU should be 

implemented in conjunction with an exclusive strategic vision and design. Both 

are needed to assure consumers that labeled products have superior energy 

conservation performance. Moreover, the program’s contribution to GHG 

emissions avoidance continues to require a defined set of goals and measures to 

accurately report results to the public. 

The Agency’s two formal written responses, as well as our evaluation of both sets 

of the Agency’s comments, are presented in Appendices D and E. 
 11-P-0010 

Status of Recommendations and 

Potential Monetary Benefits 

RECOMMENDATIONS 

POTENTIAL MONETARY 

BENEFITS (in $000s) 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Planned 

Completion 

Date 

Claimed 

Amount 

Agreed-To 

Amount 

1 12 Develop a strategic vision and program design that 

assures that the ENERGY STAR label represents 

superior energy conservation performance. 

O Assistant Administrator for 

Air and Radiation 

 

2 12 Develop a set of goals and valid and reliable 

measures that can accurately inform shareholders 

and the public of the benefits of the program. 

O Assistant Administrator for 

Air and Radiation 

 

1 O = recommendation is open with agreed-to corrective actions pending 

C = recommendation is closed with all agreed-to actions completed 

U = recommendation is undecided with resolution efforts in progress

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Appendix A 

Summaries of Prior EPA OIG, DOE OIG, and 

U.S. Government Accountability Office Reports 

Below are summaries of the three EPA OIG reports we published as part of a series of 

evaluations of EPA’s ENERGY STAR program. Appendix B lists all the recommendations and 

the status of each. Also included here is a summary of recent reports by the DOE OIG and the 

U.S. Government Accountability Office (GAO). 

EPA OIG, ENERGY STAR Program Can Strengthen Controls Protecting the Integrity of the 

Label, Report No. 2007-P-00028, August 1, 2007. 

http://www.epa.gov/oig/reports/2007/20070801-2007-P-00028.pdf

To ensure the efficiency and effectiveness of the ENERGY STAR program and the integrity of 

its label, EPA established several processes. These processes include product specification 

setting and revision, product self-certification, product verification testing, and label utilization 

monitoring. We reviewed these processes and found improvements could be made that could 

better assure the integrity of the ENERGY STAR label for the consumer of home and office 

products. 

We found the criteria for revising specifications were unclear and not documented. It was not 

evident when or what factors would trigger a specification revision. Furthermore, EPA did not 

have reasonable assurance that the self-certification process is effective. EPA relied on some 

alternative verification mechanisms, but lacked any quality assurance or review of these reported 

results. The Agency’s verification testing also lacked a clear documented methodology 

governing products selected for verification tests and does not test for statistically valid results. 

Consequently, product efficiency and energy savings reported by manufacturers were, for the 

most part, unverified by EPA review. 

We found little oversight in using the ENERGY STAR label in retail stores, which is commonly 

the purchase point for the consumer. EPA could not provide documentation related to follow-up 

actions taken, final results for all retail store assessments, or the resolution status of label 

inconsistencies. We also found that manufacturers could label and sell products as ENERGY 

STAR qualified prior to submitting test results to the Agency. Using the label on products that do 

not meet ENERGY STAR requirements may weaken the value of the label and negatively 

impact the ENERGY STAR program. 

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EPA OIG, Improvements Needed to Validate Reported ENERGY STAR Benefits, 

Report No. 09-P-0061, December 17, 2008. 

http://www.epa.gov/oig/reports/2009/20081217-09-P-0061.pdf

EPA reported that ENERGY STAR benefits represented one-half of the Agency’s total GHG 

emissions avoided in 2006. ENERGY STAR benefits are a major component of efforts reducing 

such emissions. The accuracy of the program’s reported energy savings is important in 

monitoring United States efforts to reduce GHG emissions. 

We found the ENERGY STAR program’s reported savings claims were inaccurate and the 

reported annual savings were unreliable. We identified deficiencies with the shipment data and 

the process used in calculating benefits. Deficiencies included the lack of a quality review of the 

data collected; reliance on estimates, forecasting, and unverified third-party reporting; and the 

potential inclusion of exported items. Also, EPA included savings for one DOE product that 

DOE also claimed. Additionally, sales of formerly qualified products are used to determine 

ENERGY STAR’s market transformation benefits, but we found this benefit was computed 

inconsistently. Also, the methodology used to compute the ENERGY STAR commercial sector 

benefits uses unverified assumptions. 

 

EPA OIG, ENERGY STAR Program Integrity Can Be Enhanced Through Expanded Product 

Testing, Report No. 10-P-0040, November 30, 2009. 

http://www.epa.gov/oig/reports/2010/20091130-10-P-0040.pdf

This evaluation was initiated to independently test ENERGY STAR products to determine 

whether their energy-efficient performance complied with the ENERGY STAR program’s 

required specifications. Almost all of the ENERGY STAR products in our test sample met, and 

in most cases exceeded, the program’s performance standards. However, selected non-ENERGY 

STAR products performed comparably to, and in some cases better than, ENERGY STAR 

products. That level of product performance affects the ENERGY STAR label’s image as a 

trusted national symbol for environmental protection through superior energy efficiency. 

In addition, the performance results of ENERGY STAR and non-ENERGY STAR products call 

into question the assumptions used to calculate energy savings and GHG reductions attributed to 

the program. Without an enhanced testing program, including the testing of non-ENERGY 

STAR products, EPA cannot be certain ENERGY STAR products are the more energy-efficient 

and cost-effective choice for consumers. 

 

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DOE OIG, The Department’s Management of the ENERGY STAR Program, DOE/IG-0827, 

October 2009. 

http://www.ig.energy.gov/documents/IG-0827-508.pdf

The October 2009 DOE OIG report identified many of the same findings relative to DOE’s 

administration of the program that prior EPA OIG reports identified. The DOE OIG reported that 

DOE officials had not: 

 developed a formal quality assurance program to help ensure that product specifications 

were adhered to, 

 effectively monitored the use of the ENERGY STAR label to ensure that only qualifying 

products were labeled as compliant, and 

 formalized procedures for establishing and revising product specifications and for 

documenting decisions regarding those specifications. 

The DOE OIG reported that these deficiencies could reduce consumer confidence in the integrity 

of the ENERGY STAR label. Such loss could also reduce reported energy savings, increase 

consumer risk, and diminish the value of the recent infusion of $300 million for ENERGY STAR 

rebates under the American Recovery and Reinvestment Act of 2009. 

GAO, Covert Testing Shows the Energy Star Program Certification Process Is Vulnerable to 

Fraud and Abuse, GAO-10-470, March 5, 2010. 

http://www.gao.gov/new.items/d10470.pdf

GAO’s investigation shows that ENERGY STAR is for the most part a self-certification program 

vulnerable to fraud and abuse. GAO was able to obtain ENERGY STAR certifications for 

15 bogus products, including a gas-powered alarm clock. GAO reported that certification 

controls were ineffective primarily because ENERGY STAR does not verify energy-savings data 

reported by manufacturers, as was reported in the previous EPA OIG reports. In addition, two of 

the bogus ENERGY STAR firms developed by GAO received requests from real companies to 

purchase products because these bogus firms and products were listed as ENERGY STAR 

partners. GAO reported that this clearly shows the heavy reliance of American consumers on the 

ENERGY STAR brand and the program. Companies use the ENERGY STAR certification to 

market their products, and consumers buy products relying on the certification by the 

government of reduced energy consumption and costs. Furthermore, the program is promoted 

through tax credits and appliance rebates, and federal agencies are required to purchase certain 

ENERGY STAR-certified products. 

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 Appendix B 

Status of Corrective Actions for 

Prior EPA OIG Reports 

Report Recommendation Status of Corrective Action17

3-1: Clarify the decision criteria and 

document the process for revising an 

ENERGY STAR specification, 

including identifying circumstances 

when a specification revision would 

not be revised, despite a high market 

share of qualified products. 

EPA agreed to provide interim direction to program 

administration staff that product selection should take 

specification setting and revising into account and that 

selected products should be tested within 6-12 months of the 

specification effective date by October 2007. Further, EPA 

agreed to document a broader Compliance Audit Program, 

including criteria for establishing testing priorities and a 

protocol for addressing new products and products with 

specification revisions by March 2008. 

The September 2009 MOU signed addresses the intent of this 

recommendation. 

2007-P-00028 

4-1: Establish a formal Quality 

Assurance Plan for product and 

verification testing to provide a 

reasonable assurance results 

represent the products available and 

the certification of others may be 

relied upon. 

According to EPA, it agreed to review its product testing and 

verification efforts with the intent to establish a formal, 

comprehensive Compliance Audit Program. The recent MOU 

between DOE and EPA included new enhancements to the 

testing and verification procedures. According to the MOU, 

verification of ENERGY STAR-qualifying products will be 

enhanced by the following: 

 All products will be required to be tested in an 

accredited laboratory and qualifying product 

information be submitted to the government before the 

product can be qualified as ENERGY STAR. 

 Enhanced “off-the-shelf” product testing across all 

ENERGY STAR covered product categories will be 

conducted by a combination of EPA/DOE testing, 

manufacturer funded EPA/DOE administrated testing, 

or other third party testing. 

EPA and DOE also plan to pursue qualification prior to 

labeling, laboratory qualification, and comprehensive 

verification testing to ensure that ENERGY STAR remains a 

trusted symbol for environmental protection. According to 

EPA, the transition to independent testing for products not 

subject to a third-party certification program will be complete 

by November 30, 2010. All product categories will be subject 

to independent qualification testing by the end of 2010. 

 

17 As part of this review, we did not verify the status of the corrective actions for all previous OIG reports. 

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Status of Corrective Action17 Report Recommendation 

2007-P-00028 

(continued) 

4-2: Coordinate verification testing 

with product specification setting and 

revision processes to ensure products 

are selected in a timely and relevant 

basis. 

EPA agreed to provide interim direction to program 

administration staff that product selection should take 

specification setting and revising into account and that 

selected products should be tested within 6-12 months of the 

specification effective date by October 2007. Further, EPA 

agreed to document a broader Compliance Audit Program, 

including criteria for establishing testing priorities and a 

protocol for addressing new products and products with 

specification revisions by March 2008. The recent DOE and 

EPA MOU included new provisions for the product 

specification process. Specifications will be set so that the 

ENERGY STAR label is applied consistently with established 

program principles. According to the MOU, specifications 

will be set to identify the 25 percent most efficient models 

within a product class. The MOU also allows for more 

frequent revisions to existing ENERGY STAR specifications 

so that the label will highlight top energy-efficient products 

among manufacturers that volunteer to participate. 

5-1: Establish standards to ensure 

label use inconsistencies found 

during the retail store level 

assessments are systematically 

recorded, appropriate actions are 

taken, and infractions are tracked 

until resolved or otherwise 

completed. 

According to EPA, it instituted a formal process for 

documenting and addressing possible label infractions found 

during retail-store-level assessments, to include regular 

management status reviews and final reports. 

5-2: Establish standing operating 

procedures for contract oversight to 

assure that all contractually required 

work is complete and meets the 

contract requirements. 

On September 28, 2007, the ENERGY STAR Product 

Labeling Branch Chief issued a memorandum to staff 

reiterating standard operating procedures for contractor 

oversight. 

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Status of Corrective Action17 Report Recommendation 

2-1: To improve the validity of 

reported annual savings for the 

ENERGY STAR program, establish 

and perform quality controls to 

ensure that: 

 Data in benefits calculations, 

whether from partners or third 

parties, are timely, complete, 

valid and documented. 

 The contractor and third party 

associations receiving the 

manufacturer data submittal 

forms reconcile submittals in a 

a manner that ensures the total 

annual shipments reported by 

product category are accurate 

and reflect actual numbers (not 

estimates) and are for domestic 

shipments only. 

 Agency officials improve 

contractor oversight by 

obtaining actual support for 

annual savings in a manner that 

demonstrates that the numbers 

are valid and can be reconciled. 

 Data in benefits calculations 

attributable to DOE products 

should be clearly identified and 

developed in consultation with 

DOE to avoid redundancy. 

According to the Agency, as of March 26, 2009, EPA has 

implemented the following: 

 Instituted additional checks on submitted data to 

ensure completeness and validity. 

 Instituted systematic quality assurance check on all 

data entered into the unit shipment database to 

ensure accuracy of entered data and resulting sums. 

 Instituted documentation of all communications with 

individual partners to clarify submissions. 

 Developed and made available through Website a set 

of frequently asked questions designed to reinforce 

data submittal requirements, including “U.S. only” 

and “no estimates” to improve quality of data 

submitted. 

 Met with the relevant trade associations prior to the 

beginning of 2008 shipping data collection effort to 

reinforce the purpose of the collection and the 

importance of submitting high-quality data. 

09-P-0061 

3-1: Develop and consistently apply 

a data-driven methodology to 

compute the market transformation 

effect of all product categories and 

report the benefits separately from 

ENERGY STAR-qualified products. 

EPA agreed to seek the advice of outside experts through a 

formal peer review process on its overall approach to 

evaluating benefits from the labeling program, including the 

methodology for assessing the market transformation effect. 

EPA agreed to make changes to the methodology based on the 

recommendations received, applying them consistently where 

the market transformation effect applies, and update the 

model by July 31, 2010. 

4-1: Validate the formula 

(methodology) used for calculating 

the benefits of the ENERGY STAR 

commercial program in accordance 

with EPA Quality Manual for 

Environmental Programs CIO 2105-

P-01-O, to ensure that it accurately 

reflects the impacts of EPA actions. 

EPA agreed to secure additional outside expert review of the 

methodology being used to estimate the benefits of the 

ENERGY STAR program in the commercial sector. The 

review will assure that assumptions, data sources, and 

methods used to estimate the benefits are reasonable and 

supported. 

A peer review is currently being conducted (according to the 

EPA guidance about how to conduct peer reviews) of the 

program allocation methodology that EPA uses to estimate 

the program benefits in the commercial buildings market. The 

peer reviewed is estimated to be completed by summer 2010. 

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Status of Corrective Action17 Report Recommendation 

2-1: Verify estimated energy savings 

and greenhouse gas reduction 

calculations using a market-based 

performance testing program that 

includes testing non-ENERGY 

STAR products. 

EPA presented to stakeholders plans for and a proposed 

framework for a market-based performance program on 

December 2, 2009, that leverages and expands the 

infrastructure of certification programs that test both qualified 

and nonqualified products. According to the Agency’s 

response to the draft report, the Agency is in the process of 

enhancing its approach to accounting for program savings 

including removing the market transformation effect, 

improving consistency and reassessing the baseline of core 

products. 

10-P-0040 

2-2: Revise the ENERGY STAR 

Website to include the established 

standard alongside qualifying 

product performance data and to 

provide a summary listing of the 

highest performers. 

According to EPA, beginning in December 2009, EPA began 

amending the ENERGY STAR Qualified Product lists and the 

Find-a-Product search tool to address the three main parts of 

the OIG’s request: adding key energy-efficiency performance 

data, summarizing the ENERGY STAR energy-efficiency 

criteria, and sorting qualified product information based on 

performance. This was expected to be completed by spring 

2010. 

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Appendix C 

Scope and Methodology 

We conducted this performance evaluation in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the evaluation to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions 

based on our objectives. We believe that the evidence obtained provides a reasonable basis for 

our findings and conclusions based upon our objectives. We conducted our field work for all 

three previous evaluations and this current summary work from September 2006 through August 

2010. 

 

Our review included an examination of applicable laws and regulations as well as Agency 

guidance. We reviewed those internal controls that were relevant to our objectives. We reviewed 

ENERGY STAR annual reports, Agency guidance documents, and the EPA-DOE MOU. We 

reviewed planning documents, including logic models. We also reviewed relevant reports by 

GAO, Lawrence Berkley National Laboratory, the Consortium for Energy Efficiency, and 

current media reports on the program. We met with Agency staff and contractors. We reviewed 

the methodologies governing the savings-benefit calculations for the commercial and products 

program sectors.18 Additionally, for the products sector, we reviewed documentation in support 

of the 2006 reported savings benefits. 

We also reviewed the processes in place to ensure the efficiency and effectiveness of the 

ENERGY STAR program and the integrity of its label. These processes include product 

specification setting and revision, product self-certification, product verification testing, and 

label utilization monitoring. 

Additionally, we tested a sample of both ENERGY STAR- and non-ENERGY STAR-qualified 

products. From December 2008 through February 2009, we selected 20 different ENERGY 

STAR-qualified products for testing from each of 3 product categories. Two identical models of 

each product category were purchased for a total of 40 ENERGY STAR-qualified products per 

category, 120 products in all. We also tested the performance of some non-ENERGY STAR 

products. We purchased 10 non-ENERGY STAR products (2 each of 5 models) from the same 

3 product categories for a total of 30 non-ENERGY STAR products. These products underwent 

the same testing as our sample of ENERGY STAR products, and the results were compared with 

ENERGY STAR specifications. 

We integrated the results of all our prior ENERGY STAR reports to provide this overall 

assessment of the effectiveness of EPA’s oversight and management of the ENERGY STAR 

program and the controls in place to ensure the overall integrity of the ENERGY STAR label. 

 

18 The residential and industrial program sectors were excluded from our second review. 

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Appendix D 

Agency Comments (9/13/10) and OIG Evaluation 

The initial response from the Assistant Administrator was received on September 13, 2010.

MEMORANDUM

SUBJECT: Response to Evaluation Report: ENERGY STAR Needs to Define Its Primary 

Goal and Consumer Expectations – A Summary Report 

FROM: Gina McCarthy 

Assistant Administrator 

TO: Jeffrey Harris, Director 

 Cross Media Issues, Office of Program Evaluation 

Thank you for the opportunity to respond to the Evaluation Report: ENERGY STAR Needs to 

Define Its Primary Goal and Consumer Expectations – A Summary Report (Summary Report). 

We appreciate and share your interest in making the ENERGY STAR program as effective as 

possible. While we are not in a position to concur with the report’s findings, as outlined below, 

we concur with the proposed recommendations in the spirit of our ongoing commitment to 

greater transparency and clarity around how the ENERGY STAR program operates. 

The ENERGY STAR Program Has a Clearly Defined Goal and Set of Operating Principles 

The Summary Report demonstrates a misunderstanding of the purpose of the ENERGY STAR 

program. Based on expert advice and experience in terms of what makes a consumer label 

effective, the ENERGY STAR products program has not and does not seek to achieve 

environmental benefits by promoting products that meet the highest energy conservation 

standards. Rather, the program operates under the principle that the greatest environmental 

impact can be achieved by affecting the broadest number of transactions, namely the purchases 

of the average consumer, who will choose products that are good for the environment as long as 

they don’t cost more or involve a sacrifice in performance. Consistent with this principle, the 

ENERGY STAR program achieves significant results by delivering higher efficiency products to 

a large segment of consumers rather than targeting only (?) the most efficient products, which 

would appeal to a much more limited set of purchasers and likely result in less aggregate 

improvement in energy efficiency. 

 

OIG Response: The ENERGY STAR program, as described above in the Agency’s response, 

does not meet the intent of the Energy Policy Act of 2005. The Act sets out that products in the 

ENERGY STAR program should meet “the highest energy conservation standards” – an 

exclusive program. As noted above, the program operates by emphasis on achieving the 

broadest number of ENERGY STAR transactions rather than identifying and promoting 

products with the highest efficiencies. We believe this emphasis by the program has led to 

results that are inconsistent with the intent of the Act. 

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This goal, to achieve significant greenhouse gas savings by balancing energy efficiency with 

other consumer expectations, drives decisions about where to set energy efficiency requirements. 

Taking into account considerations related to consumer expectations, ENERGY STAR 

requirements are generally established to reflect the performance of the top 25 percent of models 

in a product category when the requirements go into effect. A growing market share of products 

meeting those requirements simply means that more consumers, as well as the environment, have 

benefitted from the use of more efficient products. 

OIG Response: Another potential consequence of “a growing market share meeting those 

requirements” is the corresponding growth in program metrics – greenhouse gas emissions 

avoided. We noted in a previous report that the integrity of these benefits become questionable 

when the market share of qualified products range is at a high percentage. 

Maximizing the number of voluntary business partners and qualified products is not a 

consideration in our decision making process. 

OIG Response: We believe this statement is inconsistent with the Agency’s previous statement 

that the greatest environmental impact can be achieved by affecting the broadest number of 

transactions, namely the largest number of purchases by the average consumer, who will choose 

products that are good for the environment as long as they do not cost more or sacrifice 

performance. 

Demonstrated Commitment by Senior Officials at EPA and the Department of Energy to 

Continued ENERGY STAR Program Effectiveness 

On September 30, 2009, EPA and the Department of Energy (DOE) signed a new Memorandum 

of Understanding (MOU) to enhance and expand federal programs that advance energy 

efficiency. This new EPA/DOE partnership defines roles and responsibilities in a way that 

capitalizes on the strengths of each agency and outlines a set of key improvements that will build 

the value of the ENERGY STAR Program. These improvements include adding new product 

categories to the program, instituting new measures to ensure that ENERGY STAR 

specifications are tightened as necessary to consistently represent top performing products, and 

enhancing the qualification and verification testing of ENERGY STAR products. Through a 

DOE pilot program, government testing of ENERGY STAR qualified products has also stepped 

up. In addition, we are developing a new program to promote the top tier of products within 

certain categories. 

OIG Response: Over the series of OIG evaluations of the ENERGY STAR program, the OIG 

has issued several recommendations intended to strengthen management controls to protect the 

integrity of the ENERGY STAR label, as well as improve and enhance the ENERGY STAR 

program. Beginning with the first report, EPA has taken steps to address the OIG’s 

recommendations. As highlighted in the body of the report and in Appendix B, the plans 

outlined in the MOU address many of our previously issued recommendations. However, we 

cannot make any assessments regarding the value or effectiveness of the planned enhancements 

because they have not been fully implemented. 

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Significant Enhancements to the ENERGY STAR Product Qualification and Verification 

Process Have Been Finalized 

Despite recent investigations, the Inspector General’s Offices at EPA and DOE and the 

Government Accountability Office have found no evidence of consumer fraud relating to the 

quality or performance of ENERGY STAR qualified products. EPA and the Department of 

Energy have extensive procedures in place today to prevent and uncover fraud and abuse, 

including a broad infrastructure of controls, audits and other measures to ensure that the 

ENERGY STAR name and logo are applied properly and consistently in the marketplace. 

In 2010, EPA has made dramatic changes to the way products will be qualified as part of the 

ENERGY STAR Program going forward. 

 In March, EPA instituted a policy across all 60 product categories that products may 

no longer be labeled by manufacturers until qualifying product information, including 

lab test reports, is submitted and approved by EPA. In addition, the Agency 

suspended the automated qualification process previously in place for certain product 

categories and restricted access to the ENERGY STAR certification mark to partners 

until after EPA approves a product for qualification. 

 On June 30, EPA finalized the requirements accreditation bodies and laboratories 

must meet in order to receive EPA recognition for purposes of ENERGY STAR 

product testing. 

 On August 23, EPA finalized the requirements certification bodies must meet to be 

recognized by the Agency as a third-party certifier of ENERGY STAR qualified 

product performance. 

 EPA is currently refining the eligibility criteria and partner commitments across more 

than 60 categories to officially impose third-party certification for all products 

effective December 30. 

OIG Response: The bulleted actions are responsive to some of the OIG’s findings; however, 

the Agency did not address other key aspects of our report. The Agency did not provide 

adequate information on how EPA plans to enhance its approach to accounting for program 

savings, including the calculation of GHG emissions saved. Based on control weaknesses 

identified in a previous evaluation, we concluded that EPA cannot be certain that it’s reported 

savings claims are valid or supportable, and that large amounts of GHG emissions are in fact 

being avoided. This uncertainty remains a potential program deficiency. The Agency has not 

provided specifics as to how these new proposed enhancements will correct weaknesses 

previously noted. 

Recommendations and Corrective Actions 

 

Recommendation 1: Develop a strategic vision that articulates whether the ENERGY STAR 

label represents superior energy conservation performance or a balance of voluntary partner 

interests and non-energy efficiency performance features. 

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Corrective Action Plan 

The September 30, 2009 MOU between EPA and DOE reflects a mutually agreed upon strategic 

vision for the ENERGY STAR Products Program. Namely: 

“Program Design. The ENERGY STAR label will identify energy efficient products that offer 

meaningful energy savings (at an individual and/or national level) over those products typically 

purchased. 

 Specifications will be established which overlay the consumer perspective and the need 

to consistently identify top performing products. 

 Specifications will be set to recognize products that are cost-effective from the purchaser 

standpoint; offer at least equivalent functionality and features as standard products; and 

are proven and broadly available. Cost-effectiveness in terms of payback periods will be 

defined on a case-by-case basis, taking into account both the expected useful life of the 

product and the general desirability of shorter payback periods, but will in general be 3-5 

years. 

 To identify top performing products, ENERGY STAR specifications will be set to 

identify approximately the top 25% most efficient of models within a product class under 

the ENERGY STAR specification at the time that specification becomes effective, with 

consideration of expected improvements in product efficiency and market penetration 

trends of those products that will take place between establishing a specification and the 

specification becoming effective.” 

This vision was subsequently integrated into the Enhanced Program Plan for ENERGY STAR 

Products early December, 2009 as the first important step in advancing the partnership between 

EPA/DOE and program stakeholders and in engaging with interested parties in a discussion of 

the key program enhancements outlined in the MOU. 

As noted above, one of the ENERGY STAR program enhancements referenced in the new 

EPA/DOE MOU is the addition of a top tier program nested within ENERGY STAR. The launch 

of this program, which is currently under development, presents an opportunity for EPA to 

clarify its strategic vision for the ENERGY STAR product label and how that relates to the new 

program. 

Milestone Date 

Program Development Phase 1: Market 

research and data collection 

Completed 

Program Development Phase 2: Program 

Design Option Development 

Completed 

Program Development Phase 3: Market 

Testing of Design Options 

September 2010 

Program Development Phase 4: Final Report 

and Recommendations 

November 2010 

Program Description/Materials Development 

(including refined articulation of strategic 

vision for ENERGY STAR label) 

December 2010 

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Recommendation 2: Develop a set of goals and valid and reliable measures that can accurately 

inform shareholders and the public of the benefits of the program. 

Corrective Action Plan 

Consistent with recommendations made through a recent peer review of the model used to 

document ENERGY STAR products benefits, EPA is in the process of enhancing its approach to 

accounting for program savings. An important aspect of this is better articulation of program 

goals and documentation of a market model for key product areas. (A market model is similar to 

program logic but adapted to the unique aspects of market transformation programs.) 

Milestone Date 

External Peer Review on ENERGY STAR 

Products Benefits Calculations 

Completed 

Refined Benefits Model Removing Market 

Transformation Effects and Improving 

Consistency 

August 2010 

Enhanced Documentation of Market Model January 2011 

Phase I Migration of Benefits Model to 

Nationally Accepted Platform 

March 2011 

Phase II Reassessment of Baselines for Core 

Products 

June 2011 

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Appendix E 

Agency Comments (10/4/10) and OIG Evaluation 

The second response from the Assistant Administrator was received on October 4, 2010 

MEMORANDUM

SUBJECT: Response to Evaluation Report: ENERGY STAR Needs to Define Its Primary 

Goal and Consumer Expectations – A Summary Report 

FROM: Gina McCarthy 

Assistant Administrator 

TO: Jeffrey Harris, Director 

 Cross Media Issues, Office of Program Evaluation 

Thank you for the opportunity to respond to the Evaluation Report: ENERGY STAR Needs to 

Define Its Primary Goal and Consumer Expectations – A Summary Report (Summary Report). 

We appreciate and share your interest in making the ENERGY STAR program as effective as 

possible. While we are not in a position to concur with the report’s findings, as outlined below, 

we concur with the proposed recommendations in the spirit of our ongoing commitment to 

greater transparency and clarity around how the ENERGY STAR program operates. 

The ENERGY STAR Program Has a Clearly Defined Goal and Set of Operating Principles 

The goal of the ENERGY STAR products program is to identify and promote energy-efficient 

products in order to reduce energy consumption, improve energy security, and reduce pollution 

through voluntary labeling of products that meet the highest energy conservation standards as 

authorized under the Energy Policy Act of 2005 and the Clean Air Act Section 103(g). 

OIG Response: We disagree that the Agency has a clearly defined goal and set of operating 

principles. The divergence between the initial and subsequent responses highlights the 

competing visions of the ENERGY STAR program within EPA. The Agency has yet to decide 

whether the program is intended to lead the marketplace as an exclusive program (as implied in 

the October 4, 2010, response) or follow the marketplace as an inclusive program (as stated in 

the September 13, 2010, response). More than restating the language of the Energy Policy Act 

of 2005, EPA should design, implement, and establish internal controls that assure consumers 

that they are purchasing energy-efficient products that meet the highest standards. 

EPA applies a set of principles when implementing the program. These principles are consistent 

with this goal by virtue of the fact that they narrow the pool of eligible, highest-conserving 

products to those likely to enhance consumer acceptance and confidence in the program, thereby 

increasing overall reductions in energy consumption. They include: 

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1) Significant energy savings can be realized on a national basis 

2) Product performance can be maintained or enhanced with increased energy efficiency 

3) Purchasers will recover their investment in increased energy efficiency within a 

reasonable time 

4) Energy efficiency can be achieved with several technology options, at least one of which 

is non-proprietary. 

5) Product energy consumption and energy performance can be measured and verified with 

testing 

6) Labeling would effectively differentiate products and be visible for purchasers 

Each time an ENERGY STAR performance standard is established, whether for the first time or 

as part of a revision, these principles are balanced to ensure that the specified level will deliver 

significant aggregate energy savings while at the same time ensuring that products are costeffective to the consumer and do not compromise functionality or performance. Considering 

these principles, identification and promotion of products with the highest energy conservation 

standards may result in setting an ENERGY STAR efficiency level that the highest 25% of 

models in terms of efficiency can meet because this level offers the desired amount of selection 

and availability while also promising significant energy savings, cost-effective options and no 

compromise in performance. 

OIG Response: The OIG is aware of the above criteria and we reported on this process at 

length in our initial 2007 report to the Agency and again in this report. We previously 

identified the specification setting and revisions process as being unclear and lacking 

documentation. For example, although we found several instances of products with high 

market shares (some in the high 90 percentile), there was no documentation to show why the 

specifications for these products had not been revised to a more efficient standard in a timely 

manner. A key provision of the program is to ensure that consumers can identify the most 

energy-efficient products. Inconsistent application of the criteria means that the label may not 

be identifying for consumers the most energy-efficient products. Furthermore, the integrity of 

ENERGY STAR program savings or benefits becomes questionable when qualified products 

account for a high overall percentage of the market. According to EPA, several actions 

resulting from the MOU will address these historic shortcomings. However, until these 

provisions are fully implemented, their effectiveness remains unknown. 

An increase in qualified product market share is an important measure of program success. As 

the market is transformed, consumer confidence in the program is maintained by updating the 

standards to capture additional savings. New procedures, consistent with the September 30, 2009 

Memorandum of Understanding between EPA and DOE, are now in place to ensure that 

ENERGY STAR standards across all product categories are reviewed and updated in a timely 

manner so that they continue to represent the highest energy conservation standards. 

 

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OIG Response: The integrity of these savings or benefits becomes questionable when the 

market share of qualified products is at a high percentage. We believe that such cases illustrate 

how the ENERGY STAR program has sought to maximize the number of partners and 

qualified products at the expense of identifying products and practices that maximize energy 

efficiency. Although the program delivers to consumers the message that the ENERGY STAR 

label designates cost-effective, energy-efficient products, this may not be the case. 

We recognized both within the body of this report and in Appendix B that EPA has taken some 

steps to address the OIG’s previously reported recommendations. Included in this analysis are 

the plans outlined in the MOU, which appear to be, in many cases, a direct response to 

previous OIG recommendations. However, we cannot make any assessments regarding the 

value or effectiveness of these enhancements because they have neither been fully 

implemented nor reviewed by the OIG. 

Demonstrated Commitment by Senior Officials at EPA and the Department of Energy to 

Continued ENERGY STAR Program Effectiveness 

On September 30, 2009, EPA and the Department of Energy (DOE) signed a new Memorandum 

of Understanding (MOU) to enhance and expand federal programs that advance energy 

efficiency. This new EPA/DOE partnership defines roles and responsibilities in a way that 

capitalizes on the strengths of each agency and outlines a set of key improvements that will build 

the value of the ENERGY STAR Program. These improvements include adding new product 

categories to the program, instituting new measures to ensure that ENERGY STAR 

specifications are tightened as necessary to consistently represent the highest performing 

products, and enhancing the qualification and verification testing of ENERGY STAR products. 

Through a DOE pilot program, government testing of ENERGY STAR qualified products has 

also stepped up. In addition, we are developing a new program to promote the top tier of 

products within certain categories. 

Significant Enhancements to the ENERGY STAR Product Qualification and Verification 

Process Have Been Finalized 

Despite recent investigations, the Inspector General’s Offices at EPA and DOE and the 

Government Accountability Office have found no evidence of consumer fraud relating to the 

quality or performance of ENERGY STAR qualified products. EPA and the Department of 

Energy have extensive procedures in place today to prevent and uncover fraud and abuse, 

including a broad infrastructure of controls, audits and other measures to ensure that the 

ENERGY STAR name and logo are applied properly and consistently in the marketplace. 

In 2010, EPA has made dramatic changes to the way products will be qualified as part of the 

ENERGY STAR Program going forward. 

 In March, EPA instituted a policy across all 60 product categories that products may 

no longer be labeled by manufacturers until qualifying product information, including 

lab test reports, is submitted and approved by EPA. In addition, the Agency 

suspended the automated qualification process previously in place for certain product 

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categories and restricted access to the ENERGY STAR certification mark to partners 

until after EPA approves a product for qualification. 

 On June 30, EPA finalized the requirements accreditation bodies and laboratories 

must meet in order to receive EPA recognition for purposes of ENERGY STAR 

product testing. 

 On August 23, EPA finalized the requirements certification bodies must meet to be 

recognized by the Agency as a third-party certifier of ENERGY STAR qualified 

product performance. 

 EPA is currently refining the eligibility criteria and partner commitments across more 

than 60 categories to officially impose third-party certification for all products 

effective December 30. 

 EPA is in the process of enhancing its approach to accounting for program savings. 

This effort will include better documentation of the market model (i.e. the market 

response assumptions), re-evaluation of baseline assumptions and migration to a 

nationally recognized, commercially available efficiency program evaluation model. 

If you have any questions, please contact Beth Craig at 202 343 9312. 

cc: Wade Najjum 

 Brian Mclean 

 Ann Bailey 

 Jerri Dorsey 

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32 

Appendix F 

Distribution 

Office of the Administrator 

Assistant Administrator for Air and Radiation 

Agency Follow-up Official (the CFO) 

Agency Follow-up Coordinator 

General Counsel 

Associate Administrator for Congressional and Intergovernmental Relations 

Associate Administrator for External Affairs and Environmental Education 

Audit Follow-up Coordinator, Office of Air and Radiation 

Inspector General