IPCC Fourth Assessment Report: Climate Change 2007
Climate Change 2007: Working Group III: Mitigation of Climate Change Standards and labelling

Energy-efficiency performance standards and labels (S&L) for appliances and lighting are increasingly proving to be effective vehicles for transforming markets and stimulating adoption of new, more efficient technologies and products. Since the 1990s, 57 countries have legislated efficiency standards and/or labels, applied to a total of 46 products as of 2004 (Wiel and McMahon, 2005). Today, S&L programmes are among the most cost-effective instruments across the economy to reduce GHG emissions, with typically large negative costs (see Table 6.6). Products subject to standards or labels cover all end-uses and fuel types, with a focus on appliances, information and communications devices, lighting, heating and cooling equipment and other energy-consuming products.

Endorsement and comparison labels[19] induce manufacturers to improve energy efficiency and provide the means to inform consumers of the product’s relative or absolute performance and (sometimes) energy operating costs. According to studies evaluating the effectiveness of labels (Thorne and Egan, 2002), those that show the annual energy cost savings appear to be more effective than labels that present life-cycle cost savings. An advantage of a ‘categorical’ labelling scheme, showing a number of stars or an A-B-C rating, is that it is often easiest for consumers to understand and to transfer their understanding of the categories from one product purchase to others. The categories also provide a useful framework for implementing rebates, tax incentives, or preferential public procurement programmes, while categorical labels on HVAC and other installed equipment make it easy for the building inspector to check for code compliance. A downside of a categorical labelling system can be that if standards are not revised from time to time, there is no stimulus to the manufacturers to develop more efficient appliances and the whole market will be able to deliver appliances fitting the highest efficiency class.

Despite widely divergent approaches, national S&L programmes have resulted in significant cost-effective GHG savings. The US programme of national, mandatory energy-efficiency standards began in 1978. By 2004, the programme had developed (and, in 17 cases, updated) standards for 39 residential and commercial products. The total federal expenditure for implementing the US appliance standards adopted so far (US$ 2 per household) is estimated to have induced US$ 1270 per household of net-present-value savings during the lifetimes of the products affected. Projected annual residential carbon reductions in 2020 due to these appliance standards amount roughly to 9% of projected US residential carbon emissions in the 2020 (base case) (Meyers et al., 2002). In addition, the US Energy Star endorsement label programme estimates savings of 13.2 million tCO2-eq and US$ 4.2 billion in 2004 (US EPA, 2005), and projects that the programme will save 0.7 billion tonnes of CO2 over the period 2003 to 2010, growing to 1.8 billion tonnes of CO2 over the period 2003 to 2020, if the market target penetration is reached (Webber et al., 2003). According to the IEA (2003a), GHG abatement through appliance standards and labelling in Europe by 2020 will be achieved at a cost of –65 US$/tCO2 in North America and –169 €/tCO2 (–191 US$/tCO2) (i.e., both at substantial ‘net benefit’). An evaluation of the impact of the EU appliance-labelling scheme showed a dramatic shift in the efficiency of refrigerators sold in the EU in the first decade of its S&L programme, as displayed in Figure 6.5 (Bertoldi, 2000). Japan imposes stringent energy efficiency standards on equipment through its ‘Top Runner Programme’ by distinctly setting the target values based on the most energy-efficient model on the market at the time of the value-setting process. Energy-efficiency values and a rating mark are voluntarily displayed in promotional materials so that consumers can consider energy-efficiency when purchasing (Murakoshi and Nakagami, 2005).

Figure 6.5

Figure 6.5: The Impact of the EU Appliance Label (A++ to G, with G being the least efficient) on the Market of Cold Appliances in EU-25.

Source: CECED, 2005.

A recent IEA report (2003a) concludes that, without existing policy measures such as energy labelling, voluntary agreements, and MEPS, electricity consumption in OECD countries in 2020 would be about 12% (393 TWh) higher than is now predicted. The report further concludes that the current policies are on course to produce cumulative net cost savings of € 137 billion (US$ 155 billion) in OECD-Europe from 1990 to 2020. As large as these benefits are, the report found that much greater benefits could be attained if existing policies were strengthened.

A study of China’s energy-efficiency standards (Fridley and Lin, 2004) estimated savings from eight new MEPS and nine energy-efficiency endorsement labels. The study concluded that, during the first 10 years of implementation, these measures will save 200 TWh (equivalent to all of China’s residential electricity consumption in 2002) and 250 MtCO2. Among other countries, Korea shows similar evidence of the impact of labelling, as does the EU (CLASP, 2006). Recently, Australia transformed its S&L programme in order to aggressively improve energy efficiency (NAEEEC, 2006).

In the past few years, strong regional and global S&L efforts have also emerged, offering a more coordinated pathway to promote S&L and improve the cost-effectiveness and market impact of the programmes. One of these pathways is regional harmonization. The IEA (2003b) identifies several forms of multilateral cooperation, including: ‘collaboration’ in the design of tests, labels and standards; ‘harmonization’ of the test procedures and the energy-efficiency thresholds used in labels and standards; and ‘coordination’ of programme implementation and monitoring efforts. However, while easing certain trade restrictions, harmonization of standards and testing methods can have the unintended consequence of overcoming cultural and other differences that affect consumer preferences, possibly leading to increased levels of energy consumption (Moezzi and Maithili, 2002; Biermayer and Lin, 2004).

Box 6.4: Global efforts to combat unneeded standby and low-power mode consumption in appliances

Standby and low-power-mode (LoPoMo) electricity consumption of appliances is growing dramatically worldwide, while technologies exist that can eliminate or reduce a significant share of related emissions. The IEA (2001) estimated that standby power and LoPoMo waste may account for as much as 1% of global CO2 emissions and 2.2% of OECD electricity consumption. Lebot et al. (2000) estimated that the total standby power consumption in an average household could be reduced by 72%, which would result in emission reductions of 49 million tCO2 in the OECD. Various instruments – including minimum energy efficiency performance standards (MEPS), labelling, voluntary agreements, quality marks, incentives, tax rebates and energy-efficient procurement policies – are applied globally to reduce the standby consumption in buildings (Commission of the European Communities, 1999), but most of them capture only a small share of this potential. The international expert community has been urging a 1-Watt target (IEA, 2001). In 2002, the Australian government introduced a ‘one-watt’ plan aimed at reducing the standby power consumption of individual products to less than one watt. To reach this, the National Appliance and Equipment Energy Efficiency Committee has introduced a range of voluntary and mandatory measures to reduce standby – including voluntary labelling, product surveys, MEPS, industry agreements and mandatory labelling (Commonwealth of Australia, 2002). As of mid-2006, the only mandatory standard regarding standby losses in the world has been introduced in California (California Energy Commission, 2006), although in the USA the Energy Policy Act of 2005 directed the USDOE to evaluate and adopt low standby power standards for battery chargers.

  1. ^  Endorsement labels (or “quality marks”) define a group of products as “efficient” when they meet pre-specified criteria, while comparison labels allow buyers to compare the efficiency of products based on factual information about their absolute or relative performance.