EUN: Jean, what is your role at the Environmental Protection Agency?

LUPINACCI: I am the director of the Commercial and Industrial Markets in the Climate Protection Partnership Division.

EUN: What does that involve? What is the role of a manager in EPA programs?

LUPINACCI: I set the broad direction and goals for the branch, and develop the short- and long-term plan. I work with the staff and the team managers to develop specific tools and activities to accomplish those goals.

EUN: What is the EPA's role in setting energy or environmental policy?

LUPINACCI: The U.S. EPA historically has been a regulatory agency. One of the recent instrumental developments of EPA has been bringing a voluntary and market mechanism approach to environmental policy. Now as a complement to its regulatory agenda, EPA has added voluntary partnerships as an effective mechanism for environmental protection.

EUN: When was the first indication that you had that EPA would be taking this track?

LUPINACCI: That was about ten years ago. When the Agency was developing the stratosphere protection regulations, we began working cooperatively with industry to help protect the stratosphere.

From those early cooperative successes, EPA started to adapt the voluntary approach for gaining environmental benefit from energy efficiency. There are many pollution benefits that go along with saving energy.

EUN: Were you involved in that first Stratosphere Protection initiative?

LUPINACCI: Yes, I was. That's where I got my start at the agency. I worked with industries to evaluate acceptable alternatives to CFC refrigerants and foam blowing agents. Those CFC applications were used in the building industry. A key responsibility was developing cooperative programs to find acceptable alternatives to CFCs that did not increase the energy requirements of the products or create new environmental problems. That is how I moved into my current work.

EUN: In your view, what is the relationship between environmental policy and energy use in the U.S.?

LUPINACCI: Energy use contributes significantly to environmental problems, particularly global and local air pollution problems. Energy policy is an important component of providing solutions for air pollution issues. As a strategy for addressing global climate change, EPA is working in partnership with industry and others to eliminate energy waste. Since the pollution happens back at the power plant, many energy consumers, including businesses, do not make the link between energy consumption and pollution.

EUN: So the EPA's focus is really on the environment, as opposed to the Department of Energy, which might be focused more directly on energy?

LUPINACCI: EPA's primary mission is protecting the environment. We happen to be able to accomplish this goal through reducing energy use. But we work cooperatively with the Department of Energy to make the government energy programs more effective, and avoid duplicating efforts.

EUN: Okay. You mentioned the Stratosphere Protection Program and said that had led to other voluntary programs. What other programs do you want to call attention to?

LUPINACCI: The flagship voluntary program was Green Lights, which was a voluntary partnership with building owners, to make their lighting systems more efficient. And then Energy Star was born from that approach.

EUN: So, the Energy Star Program is the big one?

LUPINACCI: Yes. Energy Star is the EPA's voluntary program focused on eliminating energy waste. In fact, elements of Green Lights and Energy Star Buildings are captured under Energy Star, which is one program with approaches and activities tailored to the needs of commercial, industrial, residential, and individual product markets.

EUN: I see the labels on various computers and other components. Is that still a focus of that particular program?

LUPINACCI: Yes. When you see the Energy Star label, that is a symbol that signifies top energy performance. So, when you see it on a computer, that computer not only saves you money, but it protects the environment. The intent is that consumers look for and buy products that are labeled Energy Star. We have also extended the Energy Star label to buildings. Through an innovative rating system, a building owner can compare its energy use to other buildings, and if it performs in the top 25%, it can be awarded the Energy Star label to symbolize environmental leadership.

EUN: What are some of the other products that are Energy Star labeled?

LUPINACCI: There are over 30 products that carry the Energy Star label. Besides computers, many of them are consumer products. They include appliances, such as refrigerators and clothes washers. They also include electronic products like VCRs, televisions, and other products like heating and cooling equipment that you might see in your home.

EUN: On the commercial-industrial side, are there other products in addition to computers?

LUPINACCI: Yes. EPA labels exit signs, office equipment like fax machines and copiers, roofing products, and traffic signals. And of course the whole building itself can qualify for Energy Star.

EUN: You said that there was a spec developed for the building and a rating system. Can you tell me how that was developed, and how it's implemented?

LUPINACCI: Over the last 10 years we have worked with thousands of organizations, and many were asking us the same questions. They would make energy improvements to their buildings, but they weren't exactly sure how they compared and whether they did a good job. We realized that there was no way to compare the performance of a whole building in an apples-to-apples way.

Some databases existed to look at average energy costs/square foot, or energy use. Unfortunately, these databases didn't allow adjustments for the hours of operation, or the level of computer use, or how many people worked in the building. Without making those types of adjustments, it was hard to compare energy use and know how you stand. So EPA thought that if businesses knew how their energy performance compared, and could be rewarded for excellence, it would motivate improvements and direct resources to those buildings that perform the poorest.

The rating system under Energy Star allows organizations to use an online Web tool based on a detailed survey of buildings in the country conducted by the Energy Information Agency at the Department of Energy.

EUN: I understood that the way the program would work was that a company would sign a Memorandum of Understanding, committing to upgrading or retrofitting space. Then EPA, for its part, would create a network of resources, possibly including some financing, to enable those companies to retrofit, is that correct?

LUPINACCI: Mostly. Although, we don't provide actual financing, we do provide network opportunities and guidance on both technical and financial options. Organizations can partner with EPA by committing through a partnership letter to improve their energy performance, thereby improving their bottom line and protecting the environment.

EUN: How many square feet, if that were the best measure, of space has the Energy Star program influenced?

LUPINACCI: We have roughly 16% of the commercial square footage in the country signed up.

EUN: Signed up doesn't necessarily mean that they have fulfilled their commitment?

LUPINACCI: That's right.

EUN: In the last couple of years, has that been a growing number or has it stagnated?

LUPINACCI: It grows every year. And we have been tailoring our approach by working more closely with different market sectors. For instance, we have recently introduced resources that help the commercial real estate market take advantage of improving their energy performance. By working closely with this market sector, the participation rate has really grown tremendously.

EUN: Are there any sectors that you're prioritizing now?

LUPINACCI: Yes, while improvements can be made in all sectors, we have been focusing on market sectors where national improvements can contribute to significant environmental protection. This year we are expanding our benchmarking capability from offices and K-12 schools to retail, lodging, and health care.

EUN: How would somebody in one of those sectors become involved in Energy Star?

LUPINACCI: They could do a number of things. If they would like to partner with EPA they could make an organizational commitment to improve their bottom line and the environment through Energy Star. By visiting our web site they could send us a partnership letter. But even without partnering with us, they could go to the web site and benchmark their portfolio of office buildings or schools to compare their building's performance, target the buildings that have potential for upgrades or qualify those buildings that perform in the top 25%.

EUN: How do you measure success? I was going to ask about the programs in general, but since we're really talking so much about Energy Star, how do you measure the success of Energy Star? And, particularly, in weighing the benefits to the nation against its cost?

LUPINACCI: Each year we produce an annual report because it's really important to us to know that we're accomplishing our pollution reduction goals while using the taxpayer dollars wisely. In 1999 for example, each dollar that EPA invested in our voluntary programs saved $75 on energy bills and reduced about 3.7 tons of CO2.

We take the measurement of our program goals very seriously. We use the information to continue to evaluate whether the program is delivering the right tools and incentives in a cost-effective manner. We conduct this analysis each year to determine the cost effectiveness of achieving our environmental goals.

EUN: How were goals established?

LUPINACCI: Our goals are mostly driven by our assessment of the cost-effective opportunities to prevent greenhouse gas emissions caused by energy waste. We analyze the reasons why consumers and businesses do not make investments that can enhance value and profitability and estimate the savings from voluntary interventions that are aimed at facilitating those investments.

Our analysis, as confirmed by actual upgrades reported by partners, demonstrates that on average energy use in a building can be reduced by 30% through adopting an energy strategy and investing in cost-effective technologies and practices. And the financial benefits to those organizations have been tremendous. For instance, through 1999, energy investments related to Energy Star added $2.5 billion to the net worth of U.S. businesses.

EUN: What was last year's budget cost or proposed budget for Energy Star?

LUPINACCI: That's one that we haven't actually gotten yet.

EUN: Do you suppose that voluntary programs are more successful than regulatory programs? And, if so, what makes them more successful?

LUPINACCI: Well, I think that they do different things. Voluntary approaches are particularly useful when there is an economic incentive for businesses and consumers. For instance, a CFO Magazine survey indicated that business managers don't think that energy is a controllable cost and that energy savings don't impact the bottom line. By providing business decision makers with voluntary tools to help them make those links, and get recognition for improvement, we can encourage rather than regulate investment.

EUN: What is the relationship of the two agencies [EPA and DOE] in the program?

LUPINACCI: EPA and DOE started to collaborate a few years ago to deliver Energy Star labeled products to consumers. DOE is currently responsible for setting the specifications and working with the manufacturers of home appliances and windows.

EUN: What happens if a program doesn't achieve its goals?

LUPINACCI: Well, so far Energy Star has met its annual greenhouse gas emission reduction goals.

EUN: You described earlier how the programs had evolved a bit over the years and you've added new phases. That leads me to ask if there are laws of diminishing returns from the voluntary approach, or can they keep evolving to be successful?

LUPINACCI: Part of the success of Energy Star is that at its heart is a government-backed set of specifications that make it easier for consumers and businesses to ask for energy-efficient products and services. I think as long as the market makes continual improvement and there is value to third-party, unbiased information, there is a role for keeping Energy Star specifications current and giving businesses access to the strategies of leaders.

EUN: Can you comment, specifically, on any new approaches that you would be looking to consider implementing over the next couple of years?

LUPINACCI: Well, there are two new web-based tools that will allow organizations to compare their energy performance against benchmarks. The first benchmark tool links energy expenditures with the financial performance of an organization through new energy financial ratios. The second area is to expand the rating system to measure whole building performance to more space types and industrial facilities. The financial indices are a new direction because we are developing benchmarks that are similar to other financial indicators executives use to track their business performance, but are specific to energy. For instance, a company can now track their energy expenditures against their cash flow and compare that "energy exposure" to others in their industry.

Energy Star wants to make energy a higher priority by linking it to core business issues. For instance, in the case of commercial real estate, improvements in energy performance can increase the net operating income and asset value of properties, while saving energy and protecting the environment.

EUN: At the beginning of the interview you said that your role was in establishing the Energy Star program. What is that long-term plan?

LUPINACCI: We are striving to have energy investments be driven by performance and to have that performance linked to actual business performance. For instance, in the future we envision that it could be easier to reflect the value of top energy performance in the market value of properties when they are bought and sold by using a national, comparable rating system such as Energy Star. Or when new buildings are constructed, the architect and the owner can discuss and agree on the energy needs of the building in more simple terms by using an Energy Star target, or a tenant can ask the prospective landlord if they are moving into a building that qualifies for Energy Star, or a building owner can ask service providers how much it will cost to move up a certain number of points on the rating scale and be able to compare different bids.

By facilitating these transactions, our plan is that it will be easier to prevent pollution. And those that do can be differentiated as environmental leaders.

EUN: How large a team really works on Energy Star? And what kind of autonomy does it get in working towards the goal you just described?

LUPINACCI: We are part of the Climate Protection Partnership Division at EPA. After we receive funding approval from Congress and EPA, the Division works to coordinate and tailor Energy Star so that it meets the needs of the commercial, industrial and residential and product markets. While there is autonomy to deliver a set of activities that resonate in the market, we are expecting that those activities will deliver on the goals. However, we constantly seek out involvement and feedback through our partnerships.

EUN: Correct me if I'm wrong, but it doesn't seem as though the Energy Star program is particularly controversial. And I would suppose that, except in the sense that every government program has to compete for funding that it's probably not one where approvals are that hard to come by compared to some other initiatives?

LUPINACCI: When I look back over the last 10 years, we've been fortunate to be able to initially propose an approach that was unique and innovative, to demonstrate success by articulating goals and we've met those goals. We have also formed strong partnerships with industry and environmental non-profit groups that have resulted in widespread support. And since we are accomplishing our main goal, which is preventing pollution, while delivering bottom line improvements to organizations, the program has been attractive.