China Energy Label (Energy Label)

The energy efficiency of China energy using products was quite low before the energy label was introduced. MEPS only play the role of stopping market access of very inefficient products. Manufacturers did not have the obligation to disclose the energy performance of their products, which made the collection of energy information impossible. The consumers lacked the knowledge and information channels to compare the energy performances of different products.

The overall aim of the policy is to improve the energy efficiency of energy using products and to reduce the energy consumption and CO₂ emission. It aims to make the energy information transparent and to raise the awareness of consumers and promote the market transformation towards higher energy efficient appliances.
It also provides strong support for the energy efficiency revision of MEPS by tracing the market development trends.

It is a national policy.

Relevant sectors

• Services: Commercail energy using products
• Residential: Household appliances
• Industrial: Industrial energy using products

Active options

• Mechanical ventilation
• Cooling
• Heating
• Domestic Hot Water
• Lighting
• Street Lighting/Traffic lights
• Building integrated renewable energy systems

Appliances

• Refrigerators and freezers
• Clothes Washers
• Kitchen stoves and ovens
• Microwave
• Television
• Monitors
• Computer
• Office equipment (Copiers, Fax machines, Printer, Server etc.)
• Commercial Food Cooling Equipment
• Industrial equipment such as motors, air compressors and ventilators

In addition to the minimum energy performance standards, which eliminate the most energy-consuming products from the market, the energy label has an important role in pulling the market towards more energy-efficient products.
The rules for the energy efficiency scale are formulated according to the Energy Efficiency Label Management Method. The label includes the manufacturer’s title, the product model, the energy efficiency grade, the electricity consumption in kWh/24h, the serial number and other specific requirements (e.g. volume for refrigerators).
The energy efficiency grade is identified according to the energy efficiency grade judging method (e.g. for microwave ovens: GB 24849) and a test report. For other product groups (like TVs) the Energy Efficiency Index is used to rate the energy efficiency.

Relevant target groups

• Manufacturer Manufacturers are a target group as they have to provide the label with each appliance
• Retail company Retailers must display the label on the regulated products.
• User Users get transparent information when making purchasing decision.

Direct beneficiaries

• User

  End-users directly benefit from the policy. The label provides information about the energy efficiency of a product and allows consumers to compare the energy consumption and to calculate the running costs of different products.

Indirect beneficiaries

• Manufacturer

  Higher efficient products can get higher social recognition by the energy efficient classification.

• Retail company

  The classification system can be used as marketing tool to sell energy efficient products, which are often more expensive.

• Sales person

  Information are provided to sell high efficient products. This makes it easier to sell the energy efficient products to the customers.

Relevant barriers

• Knowledge and information barriers: The main barrier addressed by the China energy label are information asymmetries that result from high transaction costs for consumers to obtain relevant information. It is often challenging for consumers to decide which product has a high energy consumption and which product is very energy efficient.
• Lack of interest and motivation in energy efficiency-improvement: Without an energy label there is a tendency that companies focus on their core activities. An energy labelling scheme can be a motivation to invest in energy efficiency improvements

Relevant incentives

• Saved energy costs: Consumers can compare the efficiency levels between different products and buy the product with the lowest running costs. The consumers can save energy costs in the use phase of the product.
• Directly increasing earnings or profits for actors on the supply side: It can be a benefit for the supply side to sell very energy-efficient products. Retailers have the chance to increase the demand for energy efficient products. This can lead to increased profits.
• Unique selling proposition for suppliers: This is a strategic benefit. It can lead to competitive advantages compared to other manufacturers and retailers.

China has a comprehensive policy package to increase the energy efficiency of energy using products. While minimum energy performance standards phase out the most inefficient appliances, the energy label increases the demand for energy efficient ones. There is not only a mandatory label but also a voluntary endorsement label, which provides information on the best performing products to the consumers. The label is only provided to products if they have an energy performance of at least a grade 2 level of the mandatory label.
The energy label goes hand in hand with the top runner program. If the product is selected by this program, there will be a top runner sign on the label (3 product groups are covered by the top runner program: refrigerators, air conditioner and TVs, status June 2016).
Capacity building measures and award competition are innovation driver for the best available technologies. In addition, there are several subsidy programmes for different types of products.
Furthermore, the government established a law obliging state agencies and organisations to purchase only energy-efficient appliances. This law raises awareness of energy efficient appliances by setting good example to the people.

• The mandatory label goes hand in hand with the minimum energy performance standard. The mandatory label uses the MEPS requirements as a maximum energy consumption threshold and benchmark.
• In June, 2016, the label was replaced by a new label with a QR code on it. The reason for this replacement is the fast development of online shopping platforms and the barcode technology.

• The market surveillance between the actual performance and labelled value could be strengthened.
• Despite the efforts to inform the consumers about the benefits of the energy label, this could be improved.

The following pre-conditions are necessary to implement the China Energy Label
Agencies or other actors responsible for implementation
China Energy Label Management Center affiliated to China National Institute of Standardization

Funding
Funding comes from the government.

Test procedures
Test standards are published for each product group. For example, for TVs the testing way of the energy efficiency index (EEI) and passive standby power shall be pursuant to the valid edition of GB 24850. Templates to fill in the testing results are available.
All level government agencies randomly sample the products from retail market. The samples will be sent to authoritative third party testing labs. The samples will be tested and compared with the data shown on label. If the testing results cannot meet the label declared performance, the manufacturers will be informed about the negative testing results. If the manufacturers accept the third party testing lab results, they will receive punishment according to management regulation. It the manufacturers do not accept the testing results, a second testing will be conducted under the witness of the manufacturers. The second testing result is the basis of the final compliance testing judgement.

Other pre-conditions
Another precondition are MEPS for the respective product group.

The label is based on national energy efficiency standards, which set testing methods, energy efficiency requirements and energy efficiency classification. Manufacturers have to send the product sample to accredited testing laboratories. If the testing results meet MEPS, energy efficiency tier will be given at the same time. The testing report is uploaded to the central database and reviewed by energy label management. If the paper review is passed, the manufacturers are authorised to design the product model specified energy label basing on the template, print the label and stick the label on the products. The information disclosed on the label is the basis for random third-party double check in market surveillance.

International co-operations
China Energy Label took reference from European energy label program to classify the energy performance of energy using products and disclose energy efficiency information to consumers.

Actors responsible for design
China National Institute of Standardization is a public funded research institute and responsible for the design of the policy.

Actors responsible for implementation
China Energy Label Management Center affiliated to China National Institute of Standardization is responsible for implementation

Monitoring
A monitoring procedure exists. All the manufacturers have to submit the testing report of products to be labelled to a centralized management system to get the approval. The testing reports and some energy efficiency information are stored in a centralized systems and disclose part of energy information to public.

Evaluation
China has limited capacity to conduct comprehensive evaluations. CLASP conducted two consumer awareness studies of energy label in 2010 and 2013. In 2010, 61.5% of 5687 consumers saw and knew China energy label, while in 2013, 97.3% of 5920 consumers saw and knew energy label. The increasing rate of awareness shows that China energy label is now widely acknowledged by consumers. In 2013 survey, 74.5% consumers knew that tier 1 is the most efficient class.
However, the awareness level varies among different product groups. Awareness of the refrigerator label is 96% while the awareness level on laptop computers is 10% (Yu et al. 2015).

• Minimising snap-back effects: This policy was not designed to minimise snap-back effects but it does not have an end date and is regularly updated.
• Minimising free-rider effects: Free-rider effects are likely to be small
• Creating Spill-over effects: The China energy label became the basis for other energy efficiency policies like the voluntary labelling scheme.
• Dynamic market transformation and/or innovation: This policy and its related centralized management mechanism help to track the market development trends. It can stimulate innovation within the appliance industry. It helps policy makers to initiate the standards revising process and to set proper MEPS and new classification scheme.
• Avoiding lost opportunities: By promoting the most energy-efficient appliances, but also showing the appliances with a high energy consumption, the energy label tries to avoid that consumers buy energy-wasting appliances (which would be a lost opportunity for saving energy).
• Minimising rebound effects: Most of product energy labels only disclose the energy efficiency, which in most cases is the ratio between output and energy input. Most labels do not include the absolute energy consumption. In some product categories, the higher product capacity e.g. size and volume have higher energy efficiency value, but they also consume more energy than the smaller ones. This labelling program does not include enough information to remind consumers in this point.

Design for sustainability aspects
In addition to the energy efficiency grade, some other aspects are covered by the energy label, like the water consumption (L/cycle) for washing machines. However, this additional information is only available for a limited number of products.

The following barriers have been experienced during the implementation of the policy

• The consumers have high awareness of energy efficiency label but do not always know how to interpret the energy efficiency information. For some products, the energy efficiency tier could be more ambitious.
• The label does not clearly communicate the relationship between the energy efficiency tiers and the energy consumption. This is confusing for some consumers (Yu et al. 2015)
• The Energy label is bound to energy standards. However, several standards fall below market development and energy label cannot change this situation.
• Energy efficiency tier does not have similar meaning for different products. For induction cookers, tier 1 means real high efficient of all products, while for refrigerators, tier 1 means a normal energy performance of the product.

China has limited capacity to conduct a comprehensive evaluation of the energy labelling program.

CLASP conducted two consumers awareness research of energy label in 2010 and 2013. In 2010, 61.5% of 5687 consumers saw and knew China energy label, while in 2013, 97.3% of 5920 consumers saw and knew energy label. The increasing rate of awareness shows that China energy label is now widely acknowledged by consumers. In 2013 survey, 74.5% consumers knew that tier 1 is the most efficient class.