Australia’s Energy Efficiency Labelling Experience Thank you Chair person and moderator for providing us with the opportunity to provide the Australian experience at this labelling learning event. We had been hoping that somebody from the agency primarily concerned with this issues – the Australian Greenhouse Office – would be able to present this case-study today. A number of factors have presented that from happening. We think that the labelling learning event is a useful contribution to the important work done by the TBT Committee aimed at eliminating technical barriers to trade, including those created by labelling regimes. Today I will focus on this presentation on the Australia’s experience with energy efficiency of electrical and gas appliances and equipment. Tim Yeend Australian Mission to the WTO

Australia’s position Labelling schemes promoting environmental and energy conservation outcomes can adversely affect trade Like other forms of technical standard setting, labelling schemes, must be designed in a manner that is least trade restrictive The TBT Agreement provides a clear framework for the preparation, adoption and application of technical standards and regulations, including those related to labelling It is Australia’s position that: Labelling schemes promoting environmental and energy conservation outcomes can adversely effect trade. There is nothing special about labelling, like other other forms of technical standard setting, great care needs to be taken that labelling schemes are designed in a manner that is least trade restrictive. The TBT Agreement provides a clear framework for the preparation, adoption and application of technical standards and regulations, including those related to labelling. Australia’s experience is that consumer information and energy conservation goals can be met within the framework of the existing TBT Agreement.

The Australian experience The Australian experience with energy conservation schemes shows that: Labelling needs to be treated like other technical standards; In ensuring that unnecessary obstacles to trade are avoided, transparency and the willingness to consider alternatives are vital. The information contained on labels should be factual and not subjective. In the area of energy efficiency labelling, Australia uses voluntary labels, which are sponsored by industry and the Government and mandatory labels. These labels must be attached to the specified product before it can be legally offered for sale. As a general rule Australia has tended to favour voluntary labelling practices but we do have some mandatory labelling requirements. Energy efficiency labelling is an example. No matter which of these approaches is adopted, the Australian experience suggests that transparency and the willingness to consider alternative approaches, in consultation with all stakeholders, is vital. The Australian view is also that the information provided on labels should be factual and not subjective. The label does not require that products be made using particular process and productions methods. Manufacturers remain free to choose the process and production method most applicable to their product. Consumers remain free to choose the product that they prefer to purchase.

Australia’s regulatory approach Commenced in some areas in 1986 and nationally in 1992 Applies to refrigerators, freezers, clothes washers & dryers, refrigerators and dishwashers Label specifications are stipulated in the Australia Standard Australia is a federation of eight states and territories and the national energy efficiency labelling program that has developed over the last ten years requires the active participation of each of the eight jurisdictions for it to function. The legal basis for the program resides in state and territory legislation, and legislation has to be amended or passed in each state and territory for any changes to the program to be made. Australia requires energy efficiency labelling for: domestic refrigerators, clothes washers, clothes dryers, dishwashers and domestic room air conditioners. It is possible that these regimes will apply to homes electronics and office equipment in the future.

How the Australian label works The star rating provides a visual comparative assessment (based on the familiar hotel and restaurant guides) The comparative energy consumption (usually kilowatt hours/year) provides an estimate of the annual energy consumption in idealised circumstances Australian consumers can be categorised into four groups: those that ignore the label entirely; those that want to save money on the operation of the appliance (they use the energy figure); those that want to make an energy conservation choice (they use the star guide) and those that are motivated by both energy conservation and financial considerations. Price is still the most important consideration when making a purchase but exit interviews with appliance purchasers show that 85-90 percent use the label information when choosing between similarly priced appliances.

Aims of the scheme The aim of the Australian system is to provide consumers with information and to contribute to energy conservation in a manner that avoids unnecessary obstacles to trade. The aim of the Australian scheme is a simple one: it is to provide consumers with information designed to promote energy conservation outcomes in a manner that ensures technical barriers to trade are not inadvertently created. The key question is how is this aim achieved?

It starts with transparency Labelling requirements are notified years in advance to suppliers with imported product so that they can influence proposed label changes Labelling requirements are published and are easily accessible by potential new entrants Labelling requirements are notified to the WTO TBT committee Even before formal notifications are made of a decision on the need to label a product in a certain way, there are important transparency and consultation processes that are undertaken. The measure is assessed on the basis of whether the benefits of the energy efficiency label exceed the cost of introducing that label. A formal verification process is undertaken, involving very extensive consultation with all stakeholders (consumers, user groups, industry groups, local and international manufactures/agents) which results in nearly all cases, a proposal that is acceptable to all. Without this extensive consultation process between government, industry and consumers, proposals for action do not proceed.

It only continues with economic justification Can the energy saving be achieved without legislation (ie using voluntary labels)? Are alternatives to labels viable? What are the likely additional costs from regulating the label and are these costs likely to be offset? A major component of this formal process is the completion of an assessment that there is an overriding economic justification for the existence of the particular approach to labelling. The assessment undertaken by the Government and stakeholders: Considers a variety of other options in addition to the preferred proposal e.g. business as usual, voluntary measures etc. Assesses whether any of the other options are capable of delivering the outcome being sought more efficiently than the labelling option. Assesses whether the labelling proposal addresses the market failure (why the market is not delivering energy efficient products without intervention). Assesses supplier and trade issues, including any adverse affects on importers (trading partners are not going to change their products for the relatively small Australian market and this could disadvantage Australian consumers)

It relies on international testing There is no “one-size-fits-all” approach In some instances, Australia uses methods-of-test developed by the relevant international bodies (IEC, ISO, etc), consistent with Article 2.4 of the TBT Agreement Regional standards are also used, for example, between Australia and New Zealand There is no one-size fits all approach to the development of specific technical standards or regulations. The processes are complicated and need to take account of a variety of domestic and international considerations. Although we recognise this, Australia also thinks that it is important, in some instances, to participate in developing method-of-test standards that are proposed to certain international standards bodies. We also try to establish regional efficiencies, for example with New Zealand.

It recognises that labels must be culturally appropriate The Australian label achieves very high recognition levels (85- 90%) Each country must use label images that communicate effectively to their citizens The same label throughout the world for non-international goods is not practical or even desirable Although international standards setting is important, Australia also recognises that every country needs to be in a position to decide for itself the most appropriate method for the communication of information to its citizens in the least trade restrictive manner.

It does impose sanctions if labelling claims are inaccurate The labelling scheme is jointly promoted and enforced by government authorities, local manufacturers and importers Unless the credibility of the energy efficiency labelling scheme is maintained, its value to consumers and participants in the scheme could be called into question. In Australia regular in store surveys are commissioned to verify that all products required to have energy efficiency labels do in fact carry them. Products and their suppliers are referred to state regulators for attention, and if the matter is serious enough to the national consumer protection agency - the Australian Competition and Consumer Commission. In addition to the market survey, Australia has an extensive check testing program to ensure that the energy efficiency claimed on the labels is valid. Items with the largest market share, items with the highest energy efficiency claims, and items that have received regulators attention in the past are most likely to be selected for check testing. In other words, the check testing selection process is not random. Our view is that monetary fines are less of a deterrent to industry members that won’t play the game than bad publicity. We therefore do everything we can to maximise the publicity that a breach of the energy efficiency regulations get.

It has achieved measurable results The labelling scheme has the support of importers and manufacturers alike and has achieved measurable results. I think the main strength of the Australian regime is the transparency of the process that is used. The body responsible for administering the energy efficiency program, the National Appliance and Equipment Energy Efficiency Committee (NAEEEC) publishes a three year work plan which shows very clearly the current appliances and equipment that are being focused on, and the ones that will receive attention over the next three years. As I have already indicated, an extensive consultation process is undertaken for each product being considered. Initially a small steering committee made up of representatives from all stakeholder groups is convened to develop preliminary draft proposals for later consideration by the wider stakeholder community. Industry needs a stable regulatory environment in which to operate and so a proposed time table is agreed with industry representatives at the earliest possible stage. Work is commenced on developing the standard that will be called up into legislation – this provides further consultation opportunities for industry. Unless a consensus is reached the proposal for the particular legislation does not go ahead. The final phase is the preparation of the Regulatory Impact Statement and its acceptance by a Government agency (the Office of Regulatory Review) whose role is to ensure that no unnecessary legislation is introduced. It is only after acceptance of the Regulatory Impact Statement that recommendations are made to the eight state and territory governments to proceed with the proposed approach. To ensure that the eight state and territory regulatory agencies behave in a consistent manner and so that industry is aware of the processes involved with the registration of their products and the apply of labels, an administrative guideline has been prepared. This even goes as far as to tell suppliers the process that will apply should their products fail check testing or similar. NAEEEC publishes an annual report each year in which it gives the status on the items it has undertaken to progress during the particular year. It is also one of the places in which breaches of the energy efficiency legislation is reported. All of the above material, plus other reports and studies can be accessed by the public on NAEEEC’s web site www.energyrating.gov.au. Each quarter NAEEEC publishes an electronic newsheet aimed at bringing the latest developments to the media and the major stakeholders of all industry groups. Finally, you should be aware that Australia has notified this legislative scheme to the TBT Committee. .

Technical Assistance Australia is actively explaining and discussing our labelling scheme through international bodies like the IEA and APEC Australia is also assisting NGOs operating in this field to develop standards and labelling schemes in developing countries (eg CLASP, partially funded by GEF) Australia is engaging in an increasing number of bilateral and regional arrangements aimed at sharing information about standards and labelling schemes The Collaborative Labelling and Appliance Standards Program (CLASP) is an NGO that provides expert advice to developing countries on this issue. The organisation is partially funded by the United Nations to undertake its work. Australian expertise and experience is provided through such bodies and more directly through exchanges on specific issues or with specific countries.

For further Information Please refer to: www.energyrating.gov.au www.standards.com.au Specific questions can be emailed to: energy.rating@greenhouse.gov.au I will be happy to try and answer as many questions as possible today. I would also refer Members to the following web pages and email address where further information may be obtained.