The Case For Eliminating Energy Star

On Friday, President Donald Trump released his budget proposal, which included targeted cuts to federal clean energy programs and ending funding to what the president calls "the Green New Scam." The Trump administration is now shifting its focus to energy efficiency programs. CNN reported Tuesday that the Environmental Protection Agency (EPA) plans to shutter the Energy Star program.

First launched under President George H.W. Bush in 1992, Energy Star sets voluntary energy efficiency standards for appliances and buildings. Products that meet the program's standards are allowed to display the Energy Star label, which is recognized by 90 percent of American households, according to the program's website. The program also helps homeowners utilize federal energy efficiency tax credits.

Energy Star says it has saved consumers more than $500 billion in energy costs since 1992, with $42 billion saved in 2020 alone. The use of Energy Star products has also prevented 4 billion tons of greenhouse gas (GHG) emissions from entering the atmosphere, according to the EPA. The EPA says the estimated annual market value of Energy Star product sales is $100 billion.

While the EPA has not confirmed that it will ax Energy Star, industry groups are lobbying the agency to keep the program intact.

"Eliminating the Energy Star program would directly contradict this administration's promise to reduce household energy costs," Paula Glover, president of Alliance to Save Energy (a nonprofit that has lobbied to keep Energy Star in the past), told CNN. A coalition of appliance manufacturers and HVAC and boiler companies sent a letter to the EPA saying that eliminating the program "will not serve the American people," reports NOTUS.

This is not the first time that Trump has proposed ending the popular program. In 2017, the president floated cutting Energy Star but the plan was halted after more than 1,000 organizations implored Congress to protect the program.

Despite having a relatively small budget—the program costs about $50 million per year and represents less than 1 percent of the EPA's spending—and being one of the "most innocuous" government programs, there are reasons to reconsider Energy Star, Nick Loris, vice president of public policy at the free market energy think tank C3 Solutions, tells Reason.

"In an age of information and where the cost of getting that information is pretty low, consumers readily have access to the many different attributes they value in the product. And the product manufacturers can still advertise the energy savings from their products" without a federal program, says Loris.

A March white paper from the Competitive Enterprise Institute on modernizing the EPA says "green purchasing programs" like Energy Star "assume the federal government needs to meddle in the marketplace by providing its seal of approval on what it deems to be environmentally satisfactory products." The paper continues, arguing, "If consumers demand certain information, then businesses will respond by disseminating this information to them." If a labeling system is needed, "then private certification organizations should play such a role."

The Cato Institute, meanwhile, has called Energy Star "a very coarse piece of energy information that may crowd out efforts" to develop more accurate ways to measure energy operating costs.

Despite the benefits that Energy Star has provided to consumers and the environment, the program is yet another example of the government doing a job that the private sector could do better. Cutting the program may not substantially reduce federal spending, but it would reduce federal creep in consumer choices.

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