1 April 2006 Collaborative Labeling and Appliance Standards Program (CLASP) The Rationale for Energy Efficiency Standards and Labels

2 What is S&L? Energy Efficiency Standards: are regulations that prescribe the energy performance of manufactured products, often prohibiting the sale of products less energy-efficient than the minimum standard. Energy Efficiency Labels: are informative labels affixed to manufactured products that indicate a products energy performance and provide purchasers with the information necessary to make an informed purchase-decision. S&L = Energy Efficiency Standards and Labels

3 The Rationale for Promoting S&L An effective energy efficiency policy must: 1) Focus on a predominance of energy use 2) Have high, cost-effective impact 3) Sustainably transform markets S&L is the most effective energy efficiency policy

4 Energy Efficiency Standards Shift Markets Clothes Washer Energy Factors in the U.S. before and after the 1994 standard 1994 Standard Energy Factor (ft 3 /kWh) Percentage of Models

5 Energy Labels Inform Consumers Australia Europe U.S.

6 … and Recommend Products U.S. Energy Star Label China Energy Conservation Certification

7 Most Products that Will Use Energy in Buildings in 2020 Have Not Yet Been Made End Use Energy Consumption in % 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% United StatesChina Energy Consumption (% of total) New stock Stock pre-2000

8 Standards Can Improve Energy Efficiency Dramatically Average Energy Consumption of New Refrigerators in the U.S.

9 Labels Overcome Market Barriers How people choose without energy labels Model A Model B Purchase Price $81 $137

10 Labels Overcome Market Barriers How people choose without energy labels Model A Model B Purchase Price $81 $137 An informed choice with an energy label Model A Model B Purchase Price $81 $137 Energy Cost $1064 $561 Total Price $1145 $698

11 Standards Focus Upstream in the Product Distribution Chain; Labels Focus Downstream Consumers Millions to billions Distributors & Retailers Hundreds to thousands Manufacturers A few large and many small Energy Suppliers Many

12 Investment in S&L Is Better Than Investment in Power Production Cost of Electricity from Various New Sources

13 S&L is Highly Cost-Effective and is Greatly Benefiting the U.S. Economy Federal spending = $2 per household Efficiency investments stimulated = $900 per household Energy bill savings = $2400 per household Net savings to the US economy = $1500 per household Average benefit/cost ratio = 2.8:1 Primary energy savings = 8% of 2020 residential energy use Peak power savings = 20% of growth Cumulative net dollar savings = $150 billion Annual carbon reductions = 37 million metric tons of carbon (in 2020), 9% reduction Lifetime Benefits from Standards for 9 Residential Products

14 Who Benefits from S&L? Manufacturers Removes/avoids non-tariff trade barriers Shares risks of innovation Environment Reduces urban pollutants & greenhouse gases Government officials Improves economic efficiency Helps meet carbon targets Consumers Reduces life cycle costs Everyone!

15 More and More Countries are Recognizing the Value of S&L Year Historic Number of Countries with at Least One Standard or Label