Current Developments in Domestic Climate Mitigation Measures Carbon footprinting and energy efficiency labelling schemes and relevant WTO rules and activities Ludivine Tamiotti, Counsellor Trade and Environment Division, WTO

Outline of presentation Carbon footprinting and energy efficiency discussions in the WTO Relevant Activities of the WTO Relevant WTO rules

Relevant Activities of the WTO

WTO/UNEP Report on Trade and Climate Change Key objectives Improve energy efficiency and reduce GHG emissions Key policy instruments Emissions and energy performance standards and labelling Regulatory instrument Promote development & deployment of climate- friendly technologies Financial mechanisms: R&D, fiscal, price and investment measures Economic incentives Internalize environmental costs Carbon tax, emissions trading schemes

WTO/UNEP Report on Trade and Climate Change Key objectives Improve energy efficiency and reduce GHG emissions Key policy instruments Emissions standards, labelling on energy performance Key WTO Agreement TBT Agreement Internalize environmental costs Carbon tax, emissions trading schemes GATT Promote development & deployment of climate- friendly technologies SCM Agreement Financial Mechanisms: R&D, fiscal, price and investment measures

Specialized committees WTO Specialized Committees The core functions of the WTO may have a place in the trade and climate change debate: The administration of a set of rules A negotiating forum

WTO Specialized Committees 2 WTO Committees are directly relevant to issues related to Carbon footprinting and energy efficiency Committee on Technical Barriers to Trade (TBT Committee) Committee on Trade and Environment (CTE)

WTO Specialized Committees Committee on Trade and Environment (CTE) General discussions of the environmental benefits of removing restrictions in the energy sector, the forestry sector, the effect of energy efficiency labelling on market access Specialized discussions on Carbon Footprinting in 2010: exchange of national experiences, briefings by international institutions

WTO Specialized Committees Committee Technical Barriers to Trade (CTBT) In recent years the TBT Committee discussed a number of product standards and labelling requirements targeted to energy efficiency or emission control Examples of regulations discussed so far include: Fuel economy standards for cars Eco-design requirements for energy- using products Energy efficiency programmes for consumer products Emission limit values for diesel engines

Relevant WTO Rules

Philosophy of the TBT Agreement Right to Take Regulatory Measures Avoid Unnecessary Obstacles to Trade

Key principles Agreement on Technical Barriers to Trade / GATT Key principles include Harmonization Non discrimination Avoidance of unnecessary trade barrier

Non-Discrimination Treatment no Less Favourable to Like Products Treatment no Less Favourable to Like Products Originating Of national origin National Treatment From any other country Most-Favoured Nation (MFN)

International Standards International Conformity Assessment Procedures Stated Preference for Philosophy of the TBT Agreement

Article 2.2 Article Avoid unnecessary obstacles to trade Legitimate objectives National security requirements Protection of animal or plant life or health Protection of the environment Prevention of deceptive practices …Inter alia… Protection of human health or safety

Carbon footprinting and energy efficiency discussions in the WTO

Global Proliferation of PCF – Key Examples of National Schemes All follow ISO lifecycle analysis principles and harmonizing with ISO 14067, but with specified methodologies (and labels) UK – PAS 2050 –Carbon Trust, Carbon Reduction Label –Becoming a world standard used by companies in United States, China, Korea, Australia, etc Japan – TS Q0010 –Reliance on PCR –July 2010 revision following road testing –Pilot project France – BP X –Multi-criteria, Mandatory? –Road testing starting 1 July 2011 –Multiple labelling formats will be tested by firms in 2011 trials

Other Emerging Government Schemes Korea – Korea Carbon Footprint Label New Zealand – National GHG Strategy for agricultural exports Chile – wine, agricultural goods Thailand – Carbon Reduction Label and Carbon Footprint Label Chinese Taipei – Carbon Label Singapore – Singapore Carbon Label China – carbon footprint label on sea scallops 24 October 2010

Concerns expressed in the CTE Lack of transparency Cost of conformity assessment Lack of harmonization Harmonization is underway on methodology (for government schemes), but labels and communication of claims of vary greatly

Concerns expressed in the CTE Market access impacts of the proliferation of private standards Non-neutrality of CFP methodologies Confusion of consumers created by multiple labelling schemes

Key Characteristics of Emissions/ energy efficiency standards Emissions/ energy efficiency standards and regulations can be… Based on designBased on performance Best used when few options for controlling emissions Prevalent to improve energy efficiency in appliances and buildings more flexibility Japans Top Runner Program (the energy performance of the most efficient model (e.g. household appliances) on the market is used to set a target for all manufacturers.

Emissions/ energy efficiency standards and regulations can be… Based on designBased on performance Defining productsDefining processes Mainly address energy efficiency & emissions related to the use of the product May result in direct environmental outcomes, as they improve energy efficiency or limit emissions to a certain level during production Key Characteristics of Emissions/ energy efficiency standards

Emissions/ energy efficiency standards and regulations can be… Based on designBased on performance Defining productsDefining processes Mandatory Voluntary Minimum Energy Performance Standards (MEPS) for appliances (Australia) ENERGY STAR (United States) Key Characteristics of Emissions/ energy efficiency standards

Emissions/ energy efficiency standards and regulations can be… Based on designBased on performance Defining productsDefining processes Mandatory Voluntary PublicPrivate Minimum energy-efficiency performance standards for major domestic appliances (Canada) Leadership in Energy and Environmental Design (LEED) in the building sector (United States) Key Characteristics of Emissions/ energy efficiency standards

Key compliance tools: Labelling Most OECD countries (energy-efficiency labelling) Many non OECD countries, e.g. South Africa, Argentina, Sri Lanka and Tunisia Also examples of voluntary energy labelling programmes for household appliances (E.g. Thailand, Hong Kong, China, India, Brazil) Scope

Key compliance tools: Labelling Scope Most OECD countries (energy-efficiency labelling) Many non OECD countries, e.g. South Africa, Argentina, Sri Lanka and Tunisia Information covered Products energy performance/emissions levels while in operation Products entire life-cycle, including its energy efficiency e.g. EU, Australia, Canada and US require energy- efficiency labels for several household appliances e.g. Nordic Swan, German Blue Angel and the EUs eco-label Flower The issue of food miles

Key compliance tools: Labelling Comparative labels compare performance among similar models Endorsement labels Seals of approval assuring consumers that a product meets certain criteria Type of instrument e.g. for household appliances in Australia, EU, Canada, US, Brazil, Tunisia, China, Thailand and Korea e.g. Energy Star label (US), Brazil, Thailand and China (Certificate for Energy Conservation Product)

Key compliance tools: Conformity assessment to determine whether the requirements in standards & regulations are fulfilled Objectives give consumers confidence in the integrity of products add value to manufacturers marketing claims

Key compliance tools: Conformity assessment Testing Inspection Type of instrument Certification Accreditation Metrology Ex post efficiency testing on labelled appliances (Electricity Generating Authority of Thailand) In the building sector, the Leadership in Energy and Environmental Design (LEED) (US) Mark that energy performance of regulated energy- using products has been verified (Canada)

Environmental effectiveness Increase in energy efficiency of products, e.g. electrical equipment Measurement tools Behavioural changes of consumers and manufacturers In California, the energy use of refrigerators in 2000 was more than two-thirds lower than in 1974 (energy-efficiency standards are in place and regularly updated since the late 1970s) In the United States, recognition of the Energy Guide label was found to be quite good; however understanding was limited, with respondents unable to determine which appliance was more energy-efficient, based on the labels

Current Developments in Domestic Climate Mitigation Measures Carbon footprinting and energy efficiency labelling schemes and relevant WTO rules and activities Ludivine Tamiotti, Counsellor Trade and Environment Division, WTO