Calls for energy labelling overhaul as sales of efficient white goods stall

Since EU regulations made A-G energy labelling mandatory, the market share of A-rated appliances has increased significantly. But following the removal of promotion incentives in 2005 manufacturers are concerned the market is beginning to stall.

The Energy Efficiency Commitment (EEC) is one of the largest support mechanisms in place to encourage improved household energy efficiency in Britain.

During the EEC’s first phase in 2002-05, energy suppliers were given an incentive to promote A-rated goods to consumers through offers and discounts, making energy-efficient products price competitive with their less-efficient counterparts.

By 2005, about 70% of cold appliances and 90% of wet appliances sold in the UK were A-rated.

However, the incentives were removed during the programme’s second phase, making the most efficient products more expensive.

While data for 2006 are still awaited, some manufacturers have warned that the impacts are already being felt. Even in 2005, A+ fridges accounted for only 3% of the market and the most efficient A++ only 1%.

Ofgem is now looking at how to encourage energy suppliers to "transform the market" by giving them greater incentives to improve market penetration of A+ and A++ products. A consultation on the matter is due later this year.

The situation is compounded by consumers’ poor understanding of what A+ and A++ mean. Manufacturers claim that few consumers realise, for example, that A+ rated appliances are 22% more energy efficient than A-rated ones.

"[A-G rating] has been an important tool… it’s done a fantastic job in driving competition and innovation but it’s no longer enough. It has probably run its course," said Steve Holton, marketing and strategic planning director at Hoover Candy. "Consumers don’t know what it means and neither do the retailers."

A major problem is that the EU framework Directive on energy labelling gives the labels an indefinite shelf life with no set dates for revision, despite technological advances which make the original ratings scheme seem ever more irrelevant.

During the Directive’s 2002 review, some member states wanted the A-G ratings rescaled but the white goods sector strongly opposed the move. It threatened to withdraw proposals for voluntary agreements because it would imply existing stock was inferior (ENDS Report 330, pp 53-54 ).

Member states reluctantly continued discussions on the basis of an A+/A++ approach (ENDS Report 330, pp 53-54 ). While A+ and A++ are officially recognised for cold goods, proposals for a new A+ category for washing machines were rejected.

Nevertheless, washing machine manufacturers have been using an energy index of 0.17 kilowatt hours per kilogram (the proposed A+ threshold) as a ‘quality mark’. The A+ classification is referenced on marketing material, but it cannot appear on the label itself because it would violate energy labelling rules. This is clearly a source of confusion.

The Environment Department (DEFRA) said the UK government will push the European Commission to review the situation as part of its commitments under the Energy Efficiency Action Plan (ENDS Report 382, pp 47-48 ).

But just providing the information might not be enough. Last year, the Sustainable Development Commission found that the EU’s energy label failed to get "more than a minority" to buy the most energy-efficient white goods. But when combined with minimum standards set by voluntary agreement with manufacturers, rapid efficiency gains were made (ENDS Report 376, pp 5-6 ).

European manufacturers are threatening to scrap voluntary agreements. European white goods association CECED says patchy government enforcement of the energy labelling scheme "has undermined industry’s ability to go to the next phase of voluntary measures." It is pushing the European Commission to implement mandatory legislative measures instead.

It also wants the EU to promote faster replacement of the 188 million large appliances that are more than ten years old, which it says would save 22 million tonnes of CO2 each year. It thinks "smart financial incentives" could help "overcome the short-term economic barrier that consumers face".

"Government must guarantee fair competition by enforcing the law and ensuring that product declarations are genuine, or our investment in high-performing products is compromised," said CECED president Magnus Yngen of Electrolux.

"The next round of improvements needs to be driven by legislation that applies to all and is enforced by all."

While the Commission continues to explore voluntary minimum standard agreements under the energy-using products Directive (ENDS Report 363, p 60 ), DEFRA has been working with retailers to persuade them to cease selling inefficient products, to sell a proportion of best-in-class products and to have an average stock that at least meets minimum standards (ENDS Report 386, pp 22-23 ).

Some retailers are taking matters into their own hands. B&Q, for example, stocks 18 dishwashers, 13 of which are A-rated and the rest B-rated. But B-rated products account for 65% of sales.

B&Q wants to increase A-rated sales by sharing sales data with manufacturers to "highlight the issue." It has also decided not to promote B-rated products and is seeking to introduce an entry-level A-rated product that is cheaper than its B-rated equivalent.