Competitions and awards

A competition and awards programme can serve as the first action in order to transform the market: the main aim is to make manufacturers invest in development, start-up of production, and commercialisation of new appliances that are more energy-efficient than the (previously existing) BAT. Further aims are to increase the competition among manufacturers as well as to draw consumer attention to energy-efficient appliances.

Worldwide implementation status
Competition and award schemes were implemented in several countries. Such programmes have a long history in Japan and in the USA. A well-known measure is the Energy Star programme that promotes very energy efficient appliances with an award; for example. But also there are other countries which have already introduced this type of policy (Zhou et al. 2012). Other programmes can be found for example in Europe and China. 

In 1993/1994, the U.S. Department of Energy (DoE) and 24 energy companies launched the Super Efficient Refrigerator Programme, which provided USD 30 million to the winner (winner takes all approach). Manufacturers’ appliances were to exceed minimum energy performance standards by 25-50%. It had been estimated that 250,000 of these refrigerators gradually entering the market would save 96 GWh annually (Economotion 1994).
Student design teams can apply for the Max Tech and Beyond: Ultra-Low Energy Use Appliance Design Competition organised by the Lawrence Berkeley National Laboratory (LBNL). “DOE is in the process of exploring mechanisms and pilot programs to bring the best ideas to market” (LBNL 2012).
Another programme from the USA is the Energy Star programme. The Environmental Protection Agency (EPA) introduced several programmes under the name “Energy Star” and avoided with all these programmes 170 MTCO₂ eq of greenhouse gas emissions in 2010. One of these Energy Star programmes is an award scheme, which started in 1993. The EPA awards manufacturers, retailers, energy companies etc. that made outstanding contributions to promote Energy Star labelled products. Categories are: Partner of the Year, Award for Excellence and Award for Sustained Excellence. To push the industry to produce energy efficient products two additional awards were introduced: The Most Efficient product designation and the Emerging Technology Award (Zhou et al. 2012).
Japan introduced an award scheme in 1948. Today a different scheme called the Energy Conservation Grand Prize is in place, which started in 1990. The awards are given out to companies, that reach a specific goal (produce high energy efficient appliances etc.). The responsible actor is the Energy Conservation Center of Japan (ECCJ), under the Japan Ministry of Economy, Trade, and Industry (METI). The criteria to win a prize are energy efficiency/usage properties (33%), recycling (17%), advanced/innovative technology properties (17%), economic/market appeal properties (17%) and environmental improvement/safety properties. The schedule is shown in the next figure:

Another Japanese programme is the award for retailer promotion of energy efficient appliances. The best stores receive an eShop logo. Some of these stores have the chance to receive one of the following top prizes: the METI Minister’s Prize, the Environmental Minister’s Prize, the Energy and Resource Agency Director’s Prize and the Energy Conservation Centre Japan President’s Prize. The criteria include: the management policies, sales staff knowledge, display and explanation, energy efficiency of the store and the sales of high energy-efficient equipment. The numbers of these top prizes were 6-7 in the earlier year and 2-4 in more recent years due to stricter selection criteria. The programme ended in 2011 (Zhou et al. 2012).
Another example comes from China. The National Lead List of Excellent Enterprises and Energy-saving Products was implemented in 2008. The lists were the following: “Energy efficient company lead list”, “highly efficient product ranking” and “total energy saved product ranking”. The prizes were awarded for room air conditioners, refrigerators, clothes washer, gas-fired water heaters, electric water heaters, computer monitors, self-ballasted compact fluorescent light bulbs, and induction stoves. In 2009, 222 awards were given in total. The responsible organisation, CNIS, publishes an official press release and holds a ceremony for the winners (Zhou et al. 2012).

Governance level
Competitions and awards can be implemented on a national, trans-national, regional and local level. Most of the time the policy was implemented on a national level.
However, the larger the awareness raised through the measure, meaning the more people are addressed, the higher the incentive for manufacturers to engage in the competition. From this perspective, the policy could be implemented on a transnational level. However, it might be advantageous to introduce such a measure in countries with the same MEPS and/or labelling regulation.

The policy can have the objective of improving the energy efficiency for any kind of appliance in all sectors.

Related sectors

• residential
• services
• industrial

• 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

A competition or award measure can be used for a very broad range of appliances, for example refrigerators, TVs, washing machines etc. Therefore the scope of appliances that can be covered is unlimited in principle.

Related target groups

• Manufacturer: The policy stimulates manufacturers into developing and marketing new, more energy-efficient and innovative products.
• Retail company: A special award or recognition may also be given to retailers participating in the sale of the award-winning product
• Consumer organisation: Consumer organisations can act as supporters to the award competition by informing residential consumers as final purchasers of the energy-efficient appliances offered by manufacturers and retailers.
• Energy agency: Energy agencies can also act as supporters to the award competition by informing residential consumers as final purchasers of the energy-efficient appliances offered by manufacturers and retailers.

Direct beneficiaries

• Manufacturer

  Manufacturers and component manufacturers can win a prize (cash prize etc.) and amortise their R&D and commercialisation costs, create innovations and become a front-runner in the market. Furthermore they can benefit as competition and awards raise the awareness of consumers and, thus, the sales figures for energy-efficient appliances.

Indirect beneficiaries

• Retail company

  Retailers are likely to benefit from the increased demand for energy-efficient appliances, which are likely to be sold at a slightly higher price.

• Wholesale company

  Wholesale companies are likely to benefit from the increased demand for energy-efficient appliances too, which are also likely to be sold at a slightly higher price.

• Investor

  As competition and awards aim at identifying highly energy efficient appliances, appliance purchasers benefit indirectly because these appliances – in general – become available on the market. Competitions and awards can - in the long run - induce market transformation. Furthermore, more energy efficient products with relatively lower upfront costs are available. By purchasing such appliances, their owners can save energy and money.

Relevant barriers

• Economic and financial barriers: For manufacturers, developing new energy-efficient products, starting up their production, and their sale, can be very time-consuming and expensive, hence it holds an economic risk. Sometimes manufacturers do not even see the advantage of energy efficiency measures and focus on their core activities and products. The same is true for retailers with the stock age and sale of such appliances. Suppliers want to be assured of an end market of sufficient size to change this risk into an opportunity (ten Cate et al. 1998). An award competition aims to provide this opportunity to suppliers. A monetary prize might therefore be the best incentive in order to amortise R&D and commercialisation investments.
• Lack of interest and motivation in energy efficiency-improvement: Appliance manufacturers may tend to focus their R&D investments on short-term changes for obtaining a quick financial return. Sometimes manufacturers focus on their core activities only without focussing on new energy-efficient technologies. Therefore award competitions can help raise the interest of companies to invest in energy efficiency.

Relevant incentives

• Unique selling proposition for suppliers: The additional R&D process facilitated by a competition and awards programme and the development of the best available technology might give the winner of the competition a unique selling proposition. An award can raise the awareness in public and underline the unique position.
• Improved reputation: Receiving an energy efficiency prize increases the reputation of a company as consumers begin to realise that the winner is in the driver seat in terms of energy-efficient technologies.
• Saved energy costs: Against the backdrop of rising energy costs, it becomes more and more interesting to invest in energy-efficient appliances. Consumers can save money when buying the awarded technology.

The most important aspect of a competition and award programme is the awareness-raising factor. However, increased consumer awareness can only be achieved through media attention. The agency managing the programme must guarantee that sufficient media attention is drawn towards the product receiving the award and the product’s manufacturer. Moreover, the winner should be presented on websites related to the topic of energy efficiency. Apart from ordinary websites, social media platforms can be used to foster awareness, especially if these campaigns also include a contest so that participants can win respective products. Other promotion strategies are newspaper, brochures, invitations, road-shows etc.
A minimum energy performance standard (MEPS) for the appliance category, which is targeted by the competition and an awards programme can be used as a benchmarking tool. A similar function can be attributed to a label (e.g. a mandatory comparative energy label) differentiating between good and bad performing appliances. For instance, the winner can be compared with both, the MEPS and the all-time best-performer, referring to the fact that the awarded appliance/ appliance manufacturer exceeded the MEPS by e.g. 50% or the current BAT by e.g. 25 %. Such a statement emphasises the significance of the achievement(s). The winner’s energy performance can also be taken as the new MEPS after a few years as a transition period.
A logo designed only for the competition and awards programme can increase consumer awareness for the winning appliance and the appliance manufacturer. The more awareness the programme can raise, the more likely it becomes that manufacturers reach for ambitious goals. Alternatively, an indication for the product receiving the award could be integrated in a mandatory or voluntary labelling scheme.
Further incentives could increase the ambition of manufacturers for winning the award and really becoming committed in R&D. For example, monetary prizes might be interesting in order to amortise R&D and commercialisation investments. Moreover, a commitment of large-quantity buyers (public authorities, retailers, hotels, schools) to purchase the winning product increases the incentive for manufacturers due to the pre-existing knowledge of demand.
Financial incentives for purchasing energy efficient appliances might enhance the market penetration of leading appliances. Especially, if financial incentives for award-winning appliances are higher compared to appliances of the same category that are also energy-efficient but less so than the award-winning products.

The following pre-conditions are necessary to implement competitions and awards:
Agencies or other actors responsible for implementation
Various actors can initiate a competition and awards programme. If the measure is to serve a particular policy goal or to be a supplementary measure to other policies, an energy department or a closely affiliated agency should be amongst the key actors.
However, such programmes can also be launched by non-governmental stakeholders such as a business and/or non-profit network.
Furthermore, an expert group needs to be set up for the technical analysis and the analysis of improvement potentials.

Funding
Depending on the status of the responsible agency (governmental or non-governmental), the budget (i.e. the cash prize for the winner and the budget for the organisation and implementation of the programme, including publicity) needs to come from the general budget of the government or from the non-governmental stakeholders.

Test procedures
Test procedures for energy consumption or efficiency are needed to define the criteria for the selection of winners in a transparent way. At best, test procedures developed for an existing national regulation (like MEPS or energy labels) can be used, and the catalogue of criteria is developed with neutral, scientific institutes.

First and foremost, it is important for the measure to identify which appliance category might have the highest positive effect(s) in terms of energy or cost savings. For example, if findings show that TV sets have rather low energy efficiency as compared to neighbouring countries, an award scheme may be highly beneficial.
Then, the agency should develop a transparent catalogue of criteria, which is necessary for picking winners. It is necessary to clarify which appliance categories are applicable; e.g. refrigerators in general or is the category further differentiated in combinations of refrigerators and freezers, two-door refrigerators etc. Research bodies should be consulted as well as business stakeholders. The latter should be addressed as soon as possible because – depending on the contest design – they need time for the application and innovation process. A deadline needs to be set. Moreover, the award scheme needs to be concretised and the prize should be defined (cash prize, financial incentives for the purchasers of a first series of award-winning appliances, publicity, technical assistance, etc.). After a defined period of time the winner of the award or competition should be selected and made public. A media agency may help launching the awareness campaign.
Ex-ante impact and cost-assessment are desirable. However, the measure is likely to be used as a supplementary initiative to other policies, and attribution of savings to an award competition may then be difficult.

Quantified target
The policy can and should have a quantitative target. The amount of award-winning products that get sold in the first one or two years after the competition—or even during the competition period if a minimum amount of sales is a condition for winning the award—and the energy savings compared to the previous BAT levels are important factors to decide whether the policy was successful or not.
If a special contract with public authorities is signed, which commit themselves to only or predominantly buy the winning product, these official figures can be used as a benchmark.
Depending on the competition design, the amount of manufacturers participating in the contest could also be used in order to indicate success or failure. For example, if a large share of manufacturers participate, it can be considered as a success.

International co-operations
Several countries have already introduced award and competition programmes. Co-operations can be helpful to exchange experience and know-how. Furthermore, it is possible to implement an award competition on transnational level. This can make the policy more effective and create a high demand towards energy-efficient products.

Monitoring
Sales figures, the improvement of BAT levels through the competition, and costs for R&D and commercialisation of the respective products may help evaluating the measure.
An independent research body should monitor and measure the impact of the programme. Important factors are the number of participating manufacturers respectively of the target group, the R&D efforts and the achievements.

Evaluation
The award or competition scheme should be evaluated by independent research institutes or a similar body. The evaluation should include overall energy savings and if possible monetary benefits and costs. Important input factors are the participating actors, the improvement of the targeted technology and the development of the market.

Relevant individual dynamics and side-effects

• Avoiding lost opportunities: By promoting the new best available technology and by supporting development and commercialisation efforts, the award competition tries to avoid lost opportunities by pulling the market towards very energy-efficient appliances.
• Minimising rebound effects: Rebound effects are possible if buyers of the award-winning products use them more frequently or intensively. Therefore, the programme should be accompanied by educational and information campaigns on the energy-efficient use of energy-efficient appliances.
• Dynamic market transformation and/or innovation: Competitions and awards can push innovation efforts of manufacturers, as they want to become the winner of the contest. An award competition can thus be the first step in dynamic market transformation, by bringing very energy-efficient best not yet available technologies (BNAT) to the market for the first time. In the mid to long run, it might also lead to market transformation, especially if a large share of manufacturers participate in the competition or follow up with similarly efficient products and if these and the award-winning ones gain higher market shares.
• Minimising snap-back effects: Once a competition and awards programme ends, it will be unsure if sales of award-winning products continue at the same rate or drop back. To minimise such snap-back effects, the policy should be combined with supporting measures (like energy labels or minimum energy performance standards). Temporary financial incentives may also be an instrument to prevent snap-back effects. Eventually, a minimum energy performance standard may make the energy-efficient appliances the market default.
• Minimising free-rider effects: In order to prevent manufacturers free-riding on award competitions, it is important to know which energy efficiency targets are attainable but demanding enough. For example, with regard to SERP, the Department of Energy investigated what is technologically feasible. Without such an analysis, manufacturers can use technologies, which they envisaged anyway. However, no free-rider effects on the demand side are to be expected: the new, even more energy-efficient products would simply not be on the market without the award competition.
• Creating Spill-over effects: The measure can activate spill-over effects. If a company achieves successes in one particular field, it may intend to also manufacture energy-efficient products in other areas. Furthermore, the participation of other companies through replication and adoption towards BAT can provide a “domino effect” for other companies to follow the front runners (Manan et al. 2010).

Design for sustainability aspects
Sustainability aspects can be included in the criteria catalogue. The award competition can include sustainability criteria like water or other resource efficiency or health aspects as values for the overall score. The more aspects that are covered, the better the award can be promoted via media channels.

Co-benefits
To a large extent the inclusion of co-benefits will depend on the country-specific context. For example, if many manufacturers are located in the country, which launched the competition or awards scheme, the push for technological improvements may also lead to positive labour market effects.

The following barriers are possible during the implementation of the policy
There are some problems, which might arise. Either there are hardly any companies participating in the contest or there are hardly any improvements to the appliance category.
A problem could be that the prize for the winner is not attractive enough resulting in a low participation rate.
Another barrier could be a complex application form, which could hinder companies in participating.

The following measures can be undertaken to overcome the barriers
In order to reach out to most manufacturers, it is necessary that the incentives of the award are strong enough. Energy efficiency criteria, on the other hand, should also be demanding enough to ensure sufficient improvement of energy efficiency.

Energy efficiency award competitions have made significant impacts to support energy efficiency and to encourage companies to develop innovative technologies (Manan et al. 2010). However, the potential energy savings vary among projects and the product development.
An example is the SERP programme from the United States: In 1993/94 the U.S. Department of Energy together with 24 energy companies launched the Super Efficient Refrigerator Programme (SERP). “[R]efrigerator manufacturers had three months to develop proposals for R/F [refrigerator/ freezer] prototypes that had automatic defrost, were CFC-free, had the capacity of conventional units, and were at least 25% more efficient than 1993 applicable federal standards” (Eckert 1995: iv). “In terms of direct sales, 25,000 SERP refrigerators are forecast to be sold during 1994 which would provide annual energy and capacity savings of 7.1 GWh and 1.6 MW conservatively […]. When the program’s complement of 250,000 refrigerators enter the market as planned, the program will result in direct annual energy savings of 96 GWh and 22 MW.” (EcoMotion 1994). According to Eckard (1995, p. 19) estimated energy savings are 1,059,800 MWh over 14 years saving USD 82,250,000 in consumers’ bills. However, more energy is to be conserved as other manufacturers also started focussing on energy-efficient appliances.

Expected costs cover the possible financial support, the award for each project and the promotion of the competition.
The question who actually pays for the costs depends on the financial institution who finances the measure. If it is located in a governmental or government-affiliated body, it is likely that, eventually, taxpayers pay for the costs.
The costs for administration and co-ordination might be negligible compared to the incentive scheme necessary to address the large share of all manufacturers. Within the U.S.-American Super Efficient Refrigerator Programme 24 utility companies committed a total amount of USD 30 million to the winner of the award scheme. This was the major share of the programme’s cost.
With regard to the R&D and production start-up investments, there is no information available.

Potential energy savings and expected costs will obviously depend on the competition and award programme. In general, the net benefits should be high with such competitions and awards, given innovations they activate and high spill-over effects.

For example, SERP’s energy savings of 1,059,800 MWh over 14 years are estimated to save USD 82.25 million in consumers’ bills (Eckard 1995, p. 19). This is almost three times the cost of the prize for the winner of the award scheme, which was USD 30 million and was the major share of the programme’s cost.