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Burning Out

What’s Behind Energy Star’s Diminished Value

The Energy Star label was designed to help you to identify the most energy-efficient products that would help you to save money on your energy bills. But fundamental flaws in the government-run program suggest that an Energy Star label shouldn’t necessarily influence your purchasing decision.

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In 2007 when John Paleka built a home in Burlington, Wis., a chief goal was energy efficiency. So, when he went shopping for appliances, he sought out models that carried the bright blue Energy Star label. Paleka purchased a Kenmore Elite Trio refrigerator and was convinced that it was the most energy-efficient model that had the features that he wanted. A year later, though, he received a letter from Sears that explained that because of a testing error that was made by the company that produced the refrigerator—LG—the refrigerator had improperly received the Energy Star label. Paleka’s refrigerator consumed more than twice the amount of electricity that he was led to believe that it would consume when he bought it. The news felt like a punch in the gut.

Paleka’s experience was part of a massive failure of the federal labeling program that involved 300,000 consumers who bought Energy Star refrigerators that were made by LG and were sold under the Kenmore and LG brands. Department of Energy found that LG did not follow the proper procedure when it tested the refrigerators, so DOE took enforcement action and entered into a settlement agreement with the company. The incident came amid growing evidence that illustrates why you should rethink the value of Energy Star—a voluntary labeling program that the federal government claims saved U.S. consumers $19 billion on energy bills while it cut greenhouse-gas emissions by 40 million tons in 2008.  

Those numbers sound impressive, but energy-efficiency experts with whom we spoke warn that you should be skeptical.  In fact, there are so many things that are wrong with the Energy Star program that energy-efficiency experts advise you to look beyond the label if you want to find a product that really is energy-efficient. Specifically, you need to be aware of these major pitfalls:

  • Saturation: The Energy Star label is supposed to signify the top 25 percent of energy performers in given product categories, but 50 percent or more models receive the label in some categories. A 2008 report that Environmental Protection Agency cited when asked about this showed that more than 25 percent of the models qualify for the Energy Star label in 20 separate product categories, including 70 percent of oil-fired boilers and 60 percent of TVs and dishwashers.
  • Lack of oversight: No third-party testing is involved in the program, because Energy Star designation is based on tests that are performed exclusively by manufacturers that obviously have a stake in the results. The government only reviews the results that are submitted by manufacturers and performs limited spot-checking/testing of products that are sold in stores.

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  • Questionable testing: It’s unbelievable that in some categories, such as home-audio equipment and refrigerators, manufacturers aren’t required to measure the total energy usage of products in all modes of operation. Essentially, the qualification is based on tests that presume that you’re going to, say, plug your CD player into an electrical outlet but never actually play a CD on it!
  • Cost factors: Although the cost of energy-efficient features themselves might be small, energy-efficiency scientists and engineers warn that manufacturers typically load up their most energy-efficient models with expensive features that greatly increase the price. In addition, federal data show that the price of electricity varies by more than 300 percent among all of the states. So, the amount that you save in energy costs can differ widely by region.

A 23 percent increase in residential electricity use has contributed to the average U.S. price of electricity for households rising to 11.47 cents per kilowatt hour, up 10 percent since 2007, Energy Information Administration data show. So, it’s no wonder that consumers are concerned about energy efficiency, not to mention the air pollution and greenhouse gases that are produced by increasing energy usage. If Energy Star was designed to help solve these problems, we believe that it’s difficult at this point to see how it has.

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