Policy roadmap and targets for very efficient appliances

A policy roadmap sets ambitious, yet achievable energy saving targets and includes comprehensive medium to long-term policy-making strategies towards making very energy efficient appliances the standard. The strategies will be most effective when combining various policies and measures with consistent policy packages (such as those recommended by bigEE) to achieve energy efficiency and promote energy-efficient products.

Worldwide implementation status
Several countries have already set up ambitious policy roadmaps and targets to achieve high energy efficiency levels for appliances.
Most of the time these targets are not formulated for appliances alone but are part of an economy-wide approach. One example is the USA’s “National Action Plan for Energy Efficiency. Vision for 2025 – A framework for Change”. The action plan was published in 2008 and includes goals and visions but also sector-specific policy programmes for the next few years (EPA 2008). The U.S. Environmental Protection Agency also published the “Clean Energy-Environment Guide to Action”. The plan specifies the policy plans and describes details about appliance standards and policy interactions (EPA 2006). Furthermore, on http://www1.eere.energy.gov/buildings/appliance_standards/schedule_setting.html the schedule of new appliance standards and some background information are described.

Another example comes from Australia. The “National Framework for Energy Efficiency (NFEE)” was established by the Ministerial Council on Energy to analyse different sector-specific policy packages. In 2007 the NFEE –Stage 2 was published with a focus on MEPS, heating, ventilation and air conditioning, inefficient lighting, and government leadership through green leases (RET 2007).

There are also some countries that have published appliance-specific policy roadmaps to increase the energy efficiency of appliances. Some examples are China and others within the European Union.
China published the “Chinese household appliance industry technology roadmap”. Three working groups were established to prepare the road map with a focus on “low-carbon-green”, and “product upgrades”. The roadmap takes into account the demands of society and market, environmental problems, opportunities, and the technical development of specific appliances (Lei 2012). The roadmap “covers the social and market needs analysis, target industry analysis, technical bottleneck analysis, research and development needs analysis etc.” (Instant News 2011).
The European Ecodesign-Directive is another kind of roadmap. It is a framework for defining the rules of setting minimum energy performance standards and energy labels for appliances. 

Some other examples of energy efficiency-related saving targets are summarised in the following table (based on IEA 2010):

Governance level
A policy roadmap can be implemented at the national, trans-national, regional or local level. Most of the time the roadmap is implemented on national and trans-national levels.

Related sectors

• residential
• services: Policy roadmaps can also address – next to residential sector appliances – appliances for the commercial and the public service sector.

• Refrigerators and freezers
• Clothes Washers
• Clothes Dryers
• Kitchen stoves and ovens 
• Coffee machine
• Microwave
• Dishwasher
• Home Audio 
• Television
• Monitors
• Computer
• Office equipment (Copiers, Fax machines, Printer, Server etc.)
• Data centres
• Commercial Food Cooling Equipment
• Commercial Laundry equipment

In principle, all appliances for improving energy efficiency are addressed by this policy.

Related target groups

• Manufacturer: A policy roadmap including specific policies and measures targets manufacturers to develop very energy-efficient appliances and to realise the calculated saving potentials.
• Retail company: Retailers need to stock, display and sell energy-efficient appliances and should be made aware of future developments being targeted so as to prepare them.
• Sales person: Sales persons need to sell energy-efficient appliances and should receive training about the benefits, including any future developments being targeted so as to prepare them.
• Governmental actor: Usually the policy roadmap is formulated at a high administrative level (super-national and national). It may then guide regional and local governments to formulate their own targets and measures. Thus, local governments also belong to the target group. A roadmap provides a planning framework for these governmental actors.

Direct beneficiaries

• Manufacturer

  The supply side benefits directly from the policy roadmap because a policy roadmap can help them to be prepared and committed to the targets as well as to reduce their uncertainties about the future market development and demand.

• Retail company

  Retailers are also part of the supply side and benefit from reduced uncertainty on the current and future demand for energy-efficient appliances, as well as potentially higher sales prices and the margins on energy-efficient appliances.

• Sales person

  Sales persons will benefit from the training offered to them when implementing the policy roadmap.

• Governmental actor

  The roadmap can be used as a planning framework including overall targets and specific measures for each sector. Afterwards concrete policies can be implemented.

Indirect beneficiaries

• Investor

  Investors will benefit from lower energy bills due to the energy-efficient appliances.

• User

  Users will benefit from lower energy bills due to the energy-efficient appliances.

• Energy agency

Relevant barriers

• Technical barriers: A policy roadmap towards very energy-efficient appliances can address the uncertainties of market development faced both by the actors on the supplier side and by investors.
• Knowledge and information barriers: A policy roadmap can make market actors aware of very energy-efficient products and their benefits for the first time.
• Lack of interest and motivation in energy efficiency-improvement: A clear political commitment and roadmap implementation can motivate market actors to develop energy efficient products.

Relevant incentives

• Directly increasing earnings or profits for actors on the supply side: The promotion of specific energy efficiency levels and options following a policy roadmap is likely to result in directly increased earnings or profits for actors on the supply side.
• Saved energy costs: Investors will save money. This is a high economic incentive supported by implementing a policy roadmap.

A policy roadmap includes an appropriate package of different policy or measures to achieve its target.
Such a policy roadmap can thus include and package all kinds of policies and measures, such as those recommended by bigEE.

The following pre-conditions are necessary to implement policy roadmaps and targets for very efficient appliances
Agencies or other actors responsible for implementation
An implementing agency/committee should be in place to co-ordinate the preparation of the policy roadmap. In addition, a steering committee can be set up to define targets, strategic options, supportive measures, and key steps of the policy roadmap as well as to monitor and evaluate the roadmap implementation (UNDP 2011b).

Funding
Achieving the targets of a policy roadmap needs supportive funding.

Test procedures
Unless they already exist, calculation methods and test procedures for measuring the energy performance of appliances will need to be developed, during the implementation of the roadmap and the policies and measures included therein. Such methods and procedures are not only particularly relevant for regulations like minimum energy performance standards and labels, but also for advice and financial incentives.

In our pdf file „How to design and implement energy efficiency policies”, we offer information on how to set energy efficiency targets and develop and implement policy roadmaps, as well as a policy planning, implementation, and learning cycle. The cycle (see the next figure) starts with an analysis of the technical and economic potential for energy efficiency in buildings and appliances.

Preparing a policy roadmap then requires the participation of multiple stakeholders. Thus, the first step is to identify key actors in different sectors and set up a co-ordination structure. The methodology of the roadmap development should also be decided on at this stage. Secondly, a roadmap should undergo a comprehensive assessment in order to understand the status-quo and to explore the impacts of different strategies. The latter can, for example, be supported by scenario analysis. Based on the assessment, the next step is to identify strategic options and conduct analysis of these options, e.g. cost-benefit analysis. Then policies or measures (e.g. financing options) to support these strategic options should be developed. Finally, a comprehensive roadmap with ambitious steps is developed (UNDP 2011b).

Quantified target
A policy roadmap is developed on quantitative targets, based on which strategic options, as well as supportive policies and measures are used. The targets can be, for example, the percentage of appliances sold with the highest energy efficiency label class, a maximum or average energy consumption per appliance sold, or the energy savings per product group.

International co-operations
International co-operations that share experiences of preparing a policy roadmap, e.g. in terms of the comprehensive assessment or achievable energy savings, can help policy-makers to formulate the roadmap within their jurisdiction.

Monitoring
It is often difficult to predict whether the policies or measures in a long-term policy roadmap individually or as the agreed package, will actually produce the desired results. Thus, it is important that monitoring and evaluation gives feedback to the government so that they can make adjustments to the policy roadmap (BMU 2010). Accordingly, a policy roadmap should address how monitoring and evaluation will be conducted, including method, reporting, and feedback mechanisms of the formulated roadmap (UNDP 2011b). Monitoring should not only correspond to the targets but also cover the actual progress to determine whether it follows the pathway defined in the roadmap. For the targets, as they can be formulated for appliances, it will be useful to monitor the percentage of appliances sold with the highest energy efficiency label class, the average energy consumption per appliance sold, or the energy savings per product group compared to a pre-defined baseline.

Evaluation
Evaluation includes reviewing how reasonable the targets are, the overall impact, costs, the benefits of the policy package and the contribution of the individual policies and measures and whether they work well or need to be improved, the feasibility of strategic options, implementation barriers, etc. Ideally, the results are fed back into the developed policy roadmap for further adjustment, e.g. adjusting targets and identifying need for further action.

Relevant individual dynamics and side-effects

• Dynamic market transformation and/or innovation: The policy roadmap contains the promotion and prioritization of certain energy efficiency design levels, and thus has the main objective to facilitate the market introduction or transformation of these designs, products and technologies. The ultimate goal of the roadmap is to make very energy-efficient appliances the general norm and then finally the legal standard.
• Avoiding lost opportunities: By accelerating the market introduction or transformation towards very energy-efficient appliances, the policy roadmap will — through the policy package implementation of the roadmap — indirectly contribute to avoiding lost opportunities for energy savings.
• Minimising rebound effects: The policy roadmap can minimise rebound effects if it includes policies and measures to limit energy consumption per unit of appliance (kWh/year) instead of volume-specific consumption (e.g., kWh/litre/year for refrigerators or kWh/screen size/year for TV sets), to promote energy-efficient operation, or user education, etc..
• Minimising snap-back effects: The policy roadmap can be designed to minimise snap-back effects if it contains minimum energy performance standards that secure the energy efficiency levels achieved in the market and are ultimately set at high efficiency levels. On the way to such levels, snap-back effects can also be minimised by a long-lasting information campaign, energy labels, etc.
• Minimising free-rider effects: Free-rider effects are likely to be minimal if the policy roadmap advances rapid market transformation towards making energy-efficient appliances the general norm and then finally the legal standard. This is likely to create large energy savings additional to what would have occurred in baseline market trends.
• Creating Spill-over effects: The policy roadmap can maximise spill-over effects if it includes information measures (especially those addressing the supply side), regulations such as standardisation etc. In general it maximises spill-over effects if it achieves rapid market transformation towards making very energy-efficient appliances the standard.

Design for sustainability aspects
The targets of a policy roadmap can also include other sustainable components, such as water savings, resource efficiency, or health, for the promotion of these aspects.

Co-benefits
The creation of job opportunities is usually a key co-benefit of a policy roadmap.

• There may be a lack of knowledge and skills for preparing a policy roadmap, for example, the skills needed to conduct a comprehensive and scientific assessment of the potentials and costs for improving appliance energy efficiency. 
• Stakeholders fearing loss of business may resist the creation of the roadmap and targets as well as the policy package to implement the roadmap.
• The funding needed from the government’s budget to implement the policy package may not be available.

• In order to weaken and eventually overcome resistance to the roadmap, it is important to maximise the benefits for as many stakeholders as possible and to form coalitions of the stakeholders who will benefit. It is also important to communicate the benefits of energy-efficient appliances and demonstrate the feasibility, and (if possible) the cost-effectiveness.
• Mechanisms need to be set in place at the outset to enable the feedbacks of monitoring and evaluation results to the formulated policy roadmap. 
• Capacity building and international co-operation may help to improve the knowledge and skills required for preparing a policy roadmap. 
• For funding, it is important to assess the benefits to the national economy and the state budget from increases in investment and employment as well as reduced energy imports and reduced energy prices subsidies where these exist. A removal/reduction of subsidies on end-user energy prices and on energy supply and/or introduction of energy/CO₂ taxation and emissions trading may create the funding needed to finance energy efficiency policies. Developing countries and emerging economies may also use climate finance to (co-)fund policy implementation. 

Potentially achievable energy savings vary among different policy roadmaps, depending on the defined targets.
According to findings presented in the bigEE Appliance Guide, very energy-efficient appliances allow savings of between 60 and 85% compared to inefficient models that are still on sale in many countries. If this potential were harnessed by markets and supported by policy, more than 1500 TWh of annual worldwide electricity demand and 1,000 Mt of CO₂ emissions could be saved by 2030.
Concrete benefits were calculated for the Australian National Framework for Energy Efficiency (NFEE)- Stage 1. The next table shows estimates of the impact in 2015 of MEPS, EEO and commercial and residential building code regulation programmes (RET 2007).

Source: RET 2007

The European Ecodesign Directive as kind of a framework calculates potential energy savings for every product group. Based on the product-specific regulations and the relevant impact assessments the European Commission expects EU-wide energy savings of more than 400 TWh/year by 2020.

The costs of preparing a policy roadmap towards very energy-efficient appliances can be relatively small. They mainly relate to the process and projects that help government to develop a roadmap.
Expected costs for the government implementing a policy roadmap depends on which policies and measures they decided on for achieving the targets defined in the roadmap.

Given that the potential energy savings and expected costs depend on the target and options set in the policy roadmap, it is difficult to generalise on expected net benefits.
However, policymakers could set interim targets and energy efficiency requirements during roadmap implementation at a level that is cost-effective to society and investors. At the same time, research and demonstration on ways to reduce the costs of energy-efficient appliances should be part of the roadmap. Furthermore, supporting broad market uptake of energy-efficient appliances will bring costs down due to economies of scale. In combination with removal/reduction of subsidies on end-user energy prices and on energy supply and/or introduction of energy/CO₂ taxation and emissions trading, we can expect that a well-designed and well-implemented roadmap will eventually make energy-efficient appliances cost-effective, so it will then be wise and appropriate to make them the legal standard through minimum energy performance standards.
Concrete benefits were calculated for the Australian National Framework for Energy Efficiency (NFEE)- Stage 1. Net GDP benefits of $380 million per year were projected for MEPS, EEO and commercial and residential building code regulation programmes (RET 2007).