The Energy Star program is one of several federal government programs that focus on reducing the nation’s energy consumption. The Energy Star program also includes the goal of reducing greenhouse gas emissions and energy consumption by transforming the market for energy- consuming products through voluntary partnerships with public and private organizations. The program is divided into three sectors: commercial; industry; and residential, which includes product labeling. Specifically, the program describes its product-labeling effort as a means for consumers to easily identify and purchase energy-efficient appliances that offer savings on energy bills without decreasing performance. The Energy Star program has grown and evolved since it began. EPA started Energy Star in response to the Clean Air Act Amendments of 1990 and the Energy Policy Act of 1992 in an effort to explore nonregulatory strategies for preventing or reducing pollution. In 1992, the program started labeling energy-efficient products in the marketplace. DOE partnered with EPA in 1996 to jointly manage the program. At that time, the two agencies signed a memorandum of cooperation describing each agency’s responsibilities related to use and oversight of the Energy Star label. DOE also assumed responsibility for developing product performance criteria for specific product categories, including refrigerators, dishwashers, and room air conditioners. In the Energy Policy Act of 2005, Congress formally authorized the Energy Star program to identify and promote energy-efficient products and buildings. The act further specified three goals for the program: reducing energy consumption, improving energy security, and reducing pollution. The Energy Star program has thousands of program partners, including manufacturers, retailers, utilities, government entities, energy efficiency organizations, finance partners, and home builders. To become a program partner, the business or organization voluntarily signs a partnership agreement with EPA. The agreement includes a commitment to use the partnership and Energy Star label as a means of promoting energy efficiency. Manufacturer partners must also identify the product category or categories in which their company seeks to qualify products— such as appliances or office equipment. Program partners can use the Energy Star label and other marketing material as part of their energy efficiency and environmental activities (see fig. 1). According to EPA documents, the Energy Star program contributes to EPA’s national energy and greenhouse gas reductions goals. EPA estimated that, in 2010, the Energy Star program collectively prevented 170 million metric tons of greenhouse gas emissions—roughly the equivalent of the annual emissions of 33 million vehicles—and saved consumers about $18 billion in energy costs. Energy Star products are also eligible for various tax credit and rebate programs. For example, in July 2009, DOE provided almost $300 million in funding from the American Recovery and Reinvestment Act (Recovery Act) to states and territories to promote energy reduction and stimulate the economy by encouraging consumers to replace older appliances with Energy Star-qualified products. Each state and territory developed its own rebate program for various Energy Star-qualified products. The d are expected to be expended by February 2012, with 56 states an territories participating in the rebate program. According to DOE documentation, as of May 2011, the program results include a total of 1.6 million consumer rebates totaling about $239 million; of these rebates, 88 percent were for purchase of major household appliances; 10 percent for heating, ventilation, and air conditioning products; and 2 percent for wa heaters. By providing rebates, this effort leveraged federal funds with about $1.8 billion in consumer spending and is projected to result in an estimated annual energy savings of 1.5 trillion British thermal units (Btu which is roughly equivalent to the greenhouse gas emissions from the electricity use of 38,000 homes in 1 year. Even with successes, prior reports by us, EPA’s Office of Inspector General, and others have identified several problems with the Energy Star program and its management. In 2007, we reported on weaknesses in the Energy Star’s labeling certification program. Among other things , we found that the program was qualifying products to carry the Energy Star label based on factors other than total energy consumption example, some products were qualified based on their energy consumption while in standby mode rather than when they were operational. EPA’s Office of Inspector General identified other weaknesses in a report in 2007, including problems with EPA’s documentation of the criteria it used to determine when to update produc performance specifications, and little oversight of the use of the Energy Star label in retail stores. In addition, EPA’s Office of Inspector General also found in 2010 that EPA’s implementation of the Energy Star program was inconsistent with the program’s authorized purpose. For example, it t found the program sought to maximize the number of qualified products at the expense of identifying products and practices focused on maximizing energy efficiency. Also, in 2010 we reported on serious vulnerabilities with the Energy Star’s process for qualifying products, which was generally based on self-certification of products by manufacturers. In September 2009, EPA and DOE signed an MOU to address the vulnerabilities we and EPA’s Office of Inspector General identified. The MOU’s purpose is to enhance and expand federal programs that advance energy efficiency––including Energy Star––to address climate change, economic, and energy security issues. In addition, the MOU outlines common goals and objectives, including expanding and enhancing federal energy efficiency programs, building on each agency’s role in advancing energy efficiency, and realigning program roles and responsibilities to most effectively implement their programs. The MOU also outlines four changes specific to the Energy Star program. First, it restructures the management of the program, making EPA the lead agency and giving it responsibility for establishing performance levels for all Energy Star products. Under the MOU, DOE’s primary role in the products component is leading the development of product-testing procedures. In addition, the MOU established a governing council consisting of officials from both agencies to oversee their collaboration and provide oversight for the program. Second, the MOU increases the amount of testing required to verify the performance of Energy Star-qualified products. Before the MOU, the program generally relied on a self-certification process for manufacturers to qualify products for the Energy Star label. Under the MOU, all products are now required to be tested in an accredited laboratory, and the results submitted to EPA before the products can be qualified for the Energy Star label. In addition, the MOU calls for increasing the amount of market- based testing used to verify that Energy Star-qualified products continue to meet program requirements. For this testing, selected products are taken off the shelf at retail locations and tested to determine whether they meet the Energy Star standards. The MOU also calls for the market- based testing to consist of a combination of EPA and DOE testing and manufacturer-funded testing administered by EPA or DOE, or testing by other third parties. Third, according to the MOU, the Energy Star program will aim to expand the number of qualified products while updating product performance specifications more frequently and stringently. Specifically, the MOU outlines an objective of broadening the program’s coverage of energy- efficient products, especially those in product categories that are in widespread use and consume significant amounts of energy. Under the MOU, the program set a goal of doubling the number of new product categories (from the current level) added to the program annually, depending on the availability of resources. The MOU also calls for the program to implement more stringent product performance specifications to ensure that the Energy Star label continues to represent top-performing products. The MOU outlines criteria for determining when product performance specifications should be updated: either when a certain amount of time has elapsed or when Energy Star-labeled products achieve a certain market share. For example, for products considered to be “rapidly evolving”—such as office equipment—the specifications will be updated about every 2 years. For products considered to be “longer- lived”—such as home appliances—specifications will be reviewed for possible revisions at least once every 3 years or when the market share of qualified products reaches about 35 percent––that is, according to EPA officials, when 35 percent of the shipments of a particular product qualify for Energy Star. The MOU also requires manufacturing partners to annually submit shipment data for their Energy Star products to EPA to assist in EPA’s tracking of market penetration and overall evaluation of the program. Fourth, the MOU proposed a new program to promote the “top-tier” of energy-efficient products in Energy Star product categories. Specifically, the MOU states the program would highlight about the top 5 percent of the products within a product category. The program would also promote advanced technologies associated with these most energy-efficient products in order to drive market acceptance of the products. The MOU states the new program would remain as part of the overall Energy Star program. In addition, the MOU stipulated that a marketing and brand analysis would be conducted to provide options on how to identify and label the program. As with the overall Energy Star program, the MOU designated EPA as the lead agency for the new program, with DOE providing technical support. Over the past 5 years, EPA and DOE have spent about $288 million on the Energy Star program. Despite changes to the program during this time, including implementation of the MOU, the program budgets have remained relatively stable over this time (see table 1). Federal agencies also manage additional efforts that have a significant focus on energy reduction and complement the Energy Star program. These include DOE’s federal minimum efficiency standards and the Federal Trade Commission’s (FTC) EnergyGuide labeling program. Congress first mandated that DOE develop minimum federal standards for energy efficiency for select appliances under the Energy Policy and Conservation Act (EPCA) of 1975. Currently, appliances subject to the standards include refrigerators, freezers, room air conditioners, clothes washers and dryers, dishwashers, kitchen ranges and ovens, pool heaters, water heaters, fluorescent lamp ballasts, and incandescent reflector lamps.