What's Behind the Energy Efficiency Label

You must have seen them at the electronics store. Whether it was the EU-style label with horizontal bars or the Energy Star, your white goods and (some electronics) all come with it.

Many consumers don't pause much to think about the specifics of the energy efficiency labels on their electric appliances. But there's actually a lot going on behind those seemingly simple stickers and this article will delve into what that is.

A primer on energy efficiency labels

First introduced by Australia in 1986, energy efficiency labels are now to be found in over 80 countries. From Canada to India and from China to Argentina, the world's largest markets all feature said labels on electric and electronic products.

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The rationale behind such labels is simple: influencing consumer behavior towards energy efficiency and using that as a tool to boost innovation. By giving consumers more information about the energy performance of the goods they buy, authorities hope to encourage them to buy the best performing products. Saving energy is not only good for the environment, but also for consumers' pockets. 

If enough consumers buy energy-efficient appliances, then the demand for worse performing goods will decline and manufacturers will be driven to innovate in order to stay on the market.

There are three main types of energy efficiency labels, though only two are frequently used nowadays. If you're in the U.S. or Canada, you're probably used to seeing the Energy Star label, which is a type of endorsement label. Simply put, that means that the mere fact that the label is awarded to a product means that the product is energy efficient. Specifically, in the case of the Energy Star, that it is among the top 25% performing products in its class on the market.

The most common type of label is the comparative one. You can find it in all 28 EU member states plus, in different variations, in 59 other countries. Unlike the Energy Star, this type of label compares directly the performance of a given appliance to similar products on the market.  

In the EU, its use is more restricted than that of the Energy Star in the U.S. It is used to label 14 product groups (mostly home electric appliances), compared to 75 product groups (including different types of real estate and industrial facilities) covered under the Energy Star program. A noteworthy difference is the fact that the Energy Star covers office equipment like computers and laptops, which the EU label doesn't. 

A third type of label—the informative variety, which simply states the actual energy consumption of the appliance—is rarely used anymore because it's not as effective at communicating information to consumers as the other two types.

What kind of information do energy efficiency labels convey?

That depends on the label and the product. Energy Star labels contain little else aside from the star itself and the name of the program. It is up to the consumer to educate themselves about what the label means.  

The EU energy efficiency label, however, contains a great deal more information. Regardless of the product on which it is attached, it features a comparative rating measured on a scale from A+++ to G, with A+++ being the best performing appliance in its class, and information about the make and model of the product. 

For washing machines, for example, it also displays information about their average energy consumption (measured in kWh/annum), the annual water consumption associated with it (in L/annum), the maximum size of the load (in kg), the spin classification (from A to G), and the noise pollution during the wash cycle and the spin cycle (in decibels, or dB). For fridges, the same label contains information about the energy class, the volume of the fridge and freezer (in L) and the noise pollution level (in dB).  

Do energy efficiency labels work?         

The short answer to this question is: mostly yes. The Energy Star program helped Americans save three billion metric tons of greenhouse gases between 1992 and 2017, the U.S. government estimates. In 2017 alone, it led to savings of 370 billion kWh of electricity and associated emissions reductions to the tune of 290 million metric tons of greenhouse gases, 190,000 short tons of SO2, 180,000 short tons of NOx, and 21,000 short tons of particulate matter (PM2.5).

 Meanwhile, in the EU, the energy efficiency label for appliances is expected to result in savings of 38 TWh/year, or the annual consumption of Hungary, by 2030. In monetary terms, a best-in-class (A+++) washing machine is estimated to bring consumers savings of €250 during the lifetime of the appliance.

But success is a two-edged sword. The EU label has been so successful at forcing manufacturers to make more efficient appliances, that a large percentage of devices are now labeled A and higher (A+, A++, A+++). Case in point, 55% of the washing machines sold in the EU in 2015 had an A+++ rating.

In such cases, the label is virtually useless, because it fails to be informative anymore. After all, how could an unsuspecting consumer know that, in picking a washing machine that is rated A++, they are in fact choosing a below average appliance when it comes to energy efficiency?

For this very reason, the European Commission voted in March 2019 to rescale the labels for five types of appliances: dishwasher, washing machines and driers, fridges, lamps, and electronic displays (TVs, computer screens). By scrapping the "+" ratings (A+++, A++, and A+) and returning to an A-G rating scale, the regulator hopes to fix the confusion caused by the previous system.  

Furthermore, the new labels, which will take effect in 2021, will come equipped with QR codes, which consumers will be able to scan with a smartphone to learn more about the energy performance of the product(s) they intend to purchase.

What the future holds for energy efficiency labels

Following their resounding success with electric appliances, energy efficiency labels are increasingly being used on other energy-consuming things. From buildings to cars, the system is proving quite effective in providing consumers with a quick and easy way to understand how their intended purchases compare to other products.

But not all is rosy as far as energy efficiency labels are concerned. Since they're subject to government policy, their fate depends on how keen a given administration is on energy efficiency.

Even in the EU, where their continuity is ensured by a supranational government, problems can and do come up. For instance, following Brussels' failure to renew an agreement with the U.S., the EU Energy Star program, which was a collaboration with Washington, came to an end in 2018.  

In practical terms, this rather unremarkable event has left buyers in the EU without a way of determining which is the most energy-efficient office equipment, like computers and printers. The demise of the agreement is not only affecting individual consumers, but also public entities, which are important buyers of office equipment and which used to buy Energy Star rated office equipment in order to be in line with green procurement good practices.