Course on Regulation and Sustainable Energy in Developing Countries - Session 8

ENERGY EFFICIENCY STANDARDS AND LABELING WEBINAR 22 MARCH 2012 Pierre Baillargeon Vice-President - Econoler Course on Regulation and Sustainable Energy in Developing Countries – Session 8 www.leonardo-energy.org/course-regulation-and-sustainable-energy- developing-countrieswww.mc-group.com

Standards and Labeling By Pierre Baillargeon Vice-President Econoler Webinar – March 22, 20122

PRESENTATION STRUCTURE 1. Definition of Standards and Labels 2. Rationale for Implementation 3. Implementation Steps 4. Conclusion3

1. Definition of Standards and Labels4

STANDARDS AND LABELS DEFINITION Energy efficiency standards › Often called minimum energy performance standard or MEPS › Regulations and associated procedures that prescribe the minimum energy performance of appliances or AC products › Objective: prohibit the sale of products that are less efficient than a minimum level5

STANDARDS AND LABELS DEFINITION Standards terminology can be confusing 1) Target limit on energy performance expressed usually as minimum efficiency (MEPS) • This is usually what we mean when we talk about EE standards 2) Efficiency measurement standards • Measurement equipment • Setup • Procedures • To determine the efficiency of the product6

STANDARDS AND LABELS DEFINITION Labels › Energy efficiency labels are › Informative labels › Affixed to manufactured products › Describe the product’s energy performance • Energy use and/or energy class • Efficiency • Energy cost › Provide information to consumers • Allow making informed purchases7

STANDARDS AND LABELS DEFINITION Two types of labels › Endorsement labels: only models exceeding a certain efficiency level › Comparative labels: comparing the labeled product to similar products8

STANDARDS AND LABELS DEFINITION Tunisia Comparative label design (EU adapted scheme) • Classes (ABC, star system) • Coherence with other regional schemes or trading countries • Cultural preference (star, numbering, letters, colors, language) • Information • Base label plus sticker9

2. Rationale for Implementation10

RATIONALE FOR IMPLEMENTATION › Significant EE potential › Pakistan: 20% of projected national energy demand (25 years) › Sustainable market transformation › Effective mechanisms for delivering energy savings, GHG reductions and significant financial gains to consumers and society › Stimulate manufacturers to design more efficient appliances › Labels have a strong effect on manufacturers › Information to customers is important but manufacturers react faster11

RATIONALE FOR IMPLEMENTATIONModelShare Energy Index12

RATIONALE FOR IMPLEMENTATION › Allow governments to impose performance requirements instead of prescribing specific technologies › Endorsed internationally, increasingly harmonized and progressively more adopted as part of a global approach › Savings are assured and can be measured and verified13

RATIONALE FOR IMPLEMENTATIONSource: CLASP, Energy Efficiency Labels and Standards, 2nd Edition 14

RATIONALE FOR IMPLEMENTATIONSource: CLASP, Energy Efficiency Labels and Standards, 2nd Edition 15

3. Implementation Steps16

IMPLEMENTATION STEPS Determine the Overall Scheme Testing Capability Communication and Design Program Define Standards Marketing Program Enforcement and Integrity Evaluation Feedback17

IMPLEMENTATION STEPS› Determine the overall scheme › Assess cultural, institutional and political factors • Influence program adoption and effectiveness › Establish strong and clear political legitimacy for standards › Decide the extent to which it is important to rely on existing test facilities, test procedures, label design and standards already established by international organizations or neighboring countries18

IMPLEMENTATION STEPS› Determine the overall scheme › Assess data needs of the program and the capability of the government to acquire and manage the data › Screen and select which types of products are the highest priorities - Refrigerators and specialty (Kimchi fridge) - Freezers - Clothes washers - Clothes dryer (electric or natural gas) - Washer/dryers (electric or natural gas) - Dishwashers - Ranges/ovens (electric or natural gas)19

IMPLEMENTATION STEPS Testing procedures › Basis for the development and implementation of S&L: › Comply with typical usage of equipment (local conditions, operational practices, etc.) › Consider accuracy and repeatability of testing results › Consider cost to perform testing › Test procedures could be adopted from an international body or developed nationally › Preferred scheme to avoid multiplication of metrics › Only accredited laboratories should conduct testing20

IMPLEMENTATION STEPS Testing capability › Existing testing center › Regional laboratory › Sent abroad for testing › Laboratory in country of manufacture Tunisian Fridge Testing Laboratory CETIME21

IMPLEMENTATION STEPS Design the program and define standards › Label design: key design parameters › Products to be covered › Endorsement or comparative labeling › Interaction between endorsement and comparative labels › Comparative labeling • Mandatory • Voluntary • Continuous or categorical22

IMPLEMENTATION STEPS Design the program and define standards › Label design › Regional considerations › Harmonization • Technical foundation • Label format and presentation Market Research – China23

IMPLEMENTATION STEPS Design the program and define standards › Standards-setting objectives › Eliminate inefficient models from being produced locally • What will be the impact on local manufacturers? › Prevent inefficient product imports • What will be the impact on distributors and importers? › Stimulate local manufacturers to develop more economically efficient products • Will a manufacturer support component be required? › Motivate distributors to import efficient equipment • Is a training and awareness campaign required?24

IMPLEMENTATION STEPS Design the program and define standards › Standards-setting: conducting several analyses to confirm objectives and design › Engineering analysis › Market analysis › National impact analysis › Consumer analysis › Manufacturer analysis25

IMPLEMENTATION STEPS Design the program and define standards › Standards setting: engineering analysis › Assessment of the energy performance of existing products › For each technology option that might improve efficiency: • assess technical feasibility and requested cost; • evaluate options impact on overall product performance. Life-cycle cost analysis Curve of energy index against cost Optimum cost can be used to define standards26

IMPLEMENTATION STEPS Design the program and define standards › Standards-setting: market analysis › Understand the existing market › What are the current classes › What is the market share › Measure evolution with time27

IMPLEMENTATION STEPS Design the program and define standards › Standards-setting: national impact analysis › Societal costs and benefits › Projection of impacts on gas and electric utilities (energy consumption and price) › Environmental impact (residential, commercial, power plants)28

IMPLEMENTATION STEPS Design the program and define standards › Standards-setting: consumer analysis › Economic impacts › Including effects on purchase and operating costs › Willingness to pay › Awareness about the technology › Importance of energy in the selection factors29

IMPLEMENTATION STEPSDesign the program and definestandards› Standards-setting: manufacturing analysis › Impact of a standard on manufacturers › Capability to adapt to change › Economic burden › Alternative component › Effects on profitability, growth and competitiveness of the industry › Predicts changes in employment (plant closure)30

IMPLEMENTATION STEPS Design the program and define standards › Stakeholder and consumer involvement › Collect input, make informed decisions › The more manufacturers, consumer organizations and other stakeholders are involved, the more effective will the resulting standards and labels be › Test the response of users and stakeholders early in the process31

IMPLEMENTATION STEPS Design the program and define standards › Promulgation › Determine scheduling • Take into consideration the real challenge of manufacturers, suppliers and distributors › Find appropriate balance between consensus building and unilateral government actions32

IMPLEMENTATION STEPS Communication and marketing › Support for acceptance and use of new standards and/or labels is required › Stimulation of consumers and retailers is needed to change their behavior › Targeted messages33

IMPLEMENTATION STEPS Communication and marketing › Success of communication and information campaign requires: › selecting most appropriate information channels; › creating evaluation tools; › pre-testing all the elements of the campaign; › evaluating and refining on a continuous basis the campaign based on consumer response.34

IMPLEMENTATION STEPS › Program enforcement and integrity › Monitoring and enforcing ensure program integrity • Verification: accuracy of EE information in the market • Compliance: market actors observe and apply program requirements › Education and training: program can be jeopardized without appropriate public education and training • Involvement of social organizations is important - Consumer associations - Environmental associations • Training program in - Product engineering or regulatory compliance for manufacturers - Label interpretation for product salespersons and consumers - Label and standards design for implementing agency officials and public involvement for stakeholders35

IMPLEMENTATION STEPS Evaluate the labeling or standards-setting program › Gather information and monitor program performance › Review and update on a periodic basis to ensure program viability • Test procedure adjustment • Label redesign or adjustment • Inclusion of new technologies • User pattern changes (technical and economic analyses) › Review period range from 3 to 12 years › Report activities and results to government36

TIMELINE AND BUILDING ON EXPERIENCE Timeline for labeling implementation • 2 – 3 years from cold start of first product • Can be faster after the initial learning curve Build on others experience • Market research - Survey form and procedures • Testing procedure – ISO, regional • Legal framework • Label – class harmonization, regional • Engineering – Adjust baseline and cost • National model – PAM (CLASP) • Media mix – learn from others experience37

CASE STUDY – POTENTIAL IMPACT Jordan • 4 appliances targeted : Fridges, Freezers, Washing machines, AC units • 600,000 improved product objective (4-year support program) • 343 GWh lifetime cumulative savings • 230 kTon CO2 abatement • 28 million Euros customer savings (lifetime) • 19 million Euros incremental cost38

CONCLUSION › Among the first policy tools that should be considered by policy makers › They require legal, financial, human, physical and institutional resources › They require in-depth analysis before and after program implementation (monitoring and evaluation) › Update, adjust and tune up S&L on a continuous basis39

THANK YOU Pierre Baillargeon Vice-President Econoler pbaillargeon@econoler.com40

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Course on Regulation and Sustainable Energy in Developing Countries - Session 8

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