9.1.  The title of this chapter is a catch-all, covering "cold" appliances (refrigerators and freezers), "wet" appliances (washing machines, etc.), "brown" appliances (televisions, computers, etc.), lighting and cooking appliances. Taken together these represent around 17 percent of domestic energy consumption. As the vast majority of this consumption is in the form of electricity, appliances represent a rather higher proportion—around 25 percent—of domestic carbon emissions. We do not have comparable data for commercial or office buildings, but as reliance on electricity, particularly for computers, air conditioners, and so on, is relatively higher, it is likely that "appliances" represent a significantly higher proportion of energy use overall. In the retail sector refrigeration, in particular, is also a major source of energy consumption.

9.2.  Within this sector technological development has been a double-edged sword. On the one hand, considerable progress has already been made in improving the efficiency of standard household appliances: for instance, an "A-rated" refrigerator today consumes around 140 kWh/year, compared with some 400 kWh/year for a 10-year-old model.[92] At the same time, new products are constantly being developed and marketed—the expansion in IT, plasma television screens, set-top boxes, and the increasing miniaturisation of much of this equipment, which brings with it the inefficiencies of rechargeable batteries, have more than outweighed improvements in more traditional appliances. Overall, energy consumption by appliances continues to rise.

European Union product standards

9.3.  The improvement in product standards in recent years has been driven in part by regulation, through the EU energy labelling scheme, which was introduced in 1995, and is mandatory for domestic refrigerators, washing machines, tumble dryers, washer dryers, dishwashers, lamps, electric ovens and air conditioners. The label itself was praised by Mr Meier, of the IEA, as "probably the best label in the world" (Q 434). The prominently displayed central rating, on the scale of A-G, has exerted a strong influence on both purchasers and manufacturers, encouraging them to gravitate towards higher-rated equipment.[93] Detailed data on energy consumption are also included, though less prominently. There is some latitude allowed as to additional information—in Germany, for instance, data on the financial cost of such consumption are also included.

9.4.  However, as Mr Meier also pointed out, "making and maintaining an energy label is a dynamic process and one cannot simply make a label and stop". The ratings A-G reflect not absolute energy consumption, but consumption relative to other appliances within the market. As energy efficiency generally improves, logic dictates that the ratings should be reassessed, to avoid all appliances falling into in the A or B grades. Mr Meier believed that the European Commission "did not have sufficient staff or the independence to be able to do the reclassification". The result, under "political pressure by the manufacturers", was that instead of assigning new values to the existing grades, two new grades, A+ and A++ were introduced. This "greatly undermined the credibility" of the scheme (Q 434). We agree: the existence, largely unadvertised, of A+ and A++ grades renders the labelling scheme misleading and close to worthless.

9.5.  In marked contrast, a useful report from the British Embassy in Tokyo drew attention to the dynamic Japanese "top runner" scheme, which was introduced in 1998. The principle of this scheme, which has also been adopted in Australia, is simple: the most efficient appliance on the market is identified as "top runner", and becomes the standard to bet met by all appliances of that type within a specified timescale. Experience has shown that Japanese manufacturers have been extremely proactive in meeting these requirements, though importers have struggled. "Top runner" standards apply to almost all home appliances (including televisions, excluded from the EU scheme), as well as to passenger and freight vehicles.

9.6.  Two further issues arise with regard to the energy labelling scheme: first, whether the standards themselves are sufficiently high; and second, whether the scheme should be extended more widely.

9.7.  On the first of these points, Mr Meier, in a presentation to our seminar in October 2004, pointed out that for a range of products the energy efficiency requirements in Europe are less stringent than those in certain other countries, particularly in the far East and North America. This point was confirmed by Lord Whitty, who conceded that "EU standards, in some areas at least, are nowhere near as good as the American and Japanese standards". The risk is therefore that the European Union is in effect becoming a dumping-ground for less efficient goods, while better quality goods are sold in more advanced markets (Q 757).

9.8.  The Minister's explanation of these effects was unconvincing. He argued, for example, that if "markets for higher standard goods around the world were greater" then manufacturers would inevitably raise product standards "irrespective of whether the individual countries were requiring those standards through a mandatory system or not" (Q 758). We cannot follow the logic of this argument. As long as manufacturers can sell lower standard goods at lower cost in the European Union, rather than investing in product development, new production lines, retraining, and so on, they will do so. However, Lord Whitty did confirm the Government's commitment to improving European standards, both through negotiating higher mandatory requirements, and through voluntary agreements with manufacturers. The main tool for the latter, which we discuss below, is the Defra-sponsored Market Transformation Programme.

9.9.  The second issue is whether the energy labelling scheme should be extended more widely. The list of products currently covered is a very traditional one, and there is a risk that it will fail to keep pace with consumers' spending on energy-consuming goods. A particular area of concern is the market for IT equipment and televisions, which continues to expand and develop rapidly. The industry itself is resistant to energy labelling: as Mr Peter Evans, of Sony, told us, "The major reason … is because there are so many functions within … a TV that to actually be able to compare an apple and an apple in terms of a TV set become very difficult … 100 Hz which gives you a flicker-free picture, the sound quality—these aspects that make the picture quality better do tend to impact on the energy consumption" (Q 461).

9.10.  Mr Evans and his colleague Mr George Fullam, of the trade association Intellect, instead drew attention to the "Energy Star" scheme, an initiative that originated as a result of public procurement policies in the United States, whereby manufacturers of office equipment, such as PCs, photocopiers, and so on, commit themselves to meeting certain minimum standards for energy consumption in use, in standby mode, and for predicted yearly average consumption in normal use. Mr Evans asserted that this demonstrated that the industry was "trying to … make the consumers aware of what the energy impact is and get them to make a balanced choice". However, while the Energy Star scheme has the merit of having an international coverage, and, by an agreement reached in 2003 between the United States and the European Council, is now administered within Europe by the European Commission,[94] he conceded that within the United Kingdom it still covered, depending on the kind of product, only between 40 and 70 percent of the market. We do not regard this level of coverage as sufficient to enable consumers to make balanced, well-informed decisions; nor do we believe that it is an adequate substitute for the mandatory and universally recognisable EU energy label (QQ 460-461).

9.11.  The draft EcoDesign of Energy Using Products Framework Directive, which was adopted by the European Parliament on 13 April, would enable the Commission, assisted by Member States, to bring forward requirements to improve the environmental performance of a potentially wide range of products throughout their life. At the time of writing, no finalised text of the Directive was available, but it is clear that in principle the application of a life cycle assessment to all stages of product design, use and ultimate disposal, offers the possibility of major gains in efficiency. However, we have already alluded to Mr Meier's comments on the lack of resources and expertise available to the Commission in implementing higher standards, and there must be doubts over the ultimate effectiveness of this ambitious proposal (Q 407).

9.12.  Product labelling, to be effective, must be dynamic, reflecting technological innovation and product improvement. The EU energy labelling scheme, for all its past success, is in danger of becoming outdated and inflexible. The decision to introduce "A+" and "A++" ratings fundamentally undermines the scheme's integrity, while European product standards lag behind those in the far East and North America.

9.13.  We therefore urge the Government to use their forthcoming EU Presidency to engage with the European institutions and Member States in strengthening and extending the mandatory labelling scheme. This process should include an investigation into whether the EU Commission has sufficient resources to implement and update the scheme adequately. It should also include consideration of comparable schemes elsewhere in the world, such as the Japanese "top runner" scheme, and their applicability within the EU.

9.14.  We welcome the Government's commitment to securing agreement to the EcoDesign of Energy Using Products Directive, and look forward to progress in this area. We recommend that the provisions of the Directive be used to establish challenging minimum standards for a wider range of energy using products.

9.15.  We also urge the Government to argue the case for extending the existing, standardised labelling scheme to a wider range of products, including IT equipment and televisions.

Market transformation

9.16.  The imposition of minimum standards, and mandatory labelling, is only part of the story. Equally important is the process of "market transformation", a less easily defined process in which Government and industry work together on improving standards, engaging in technical analysis, research and product development. The principal agency engaged in this task in the United Kingdom is the Market Transformation Programme (MTP).

9.17.  The MTP, which is funded by Defra and DTI, was described by Mr Paul White, of AEA Technology, as a "consortium of experts" (Q 471), drawn from industry, trade associations, research bodies, and so on. Its objective is to "improve the eco design performance and, therefore, the energy performance of products over time" (Q 468). However, our questioning of Mr White and other members of this consortium yielded only the most nebulous sense of how the MTP is organised, how it goes about its work, and how it measures success or failure (see QQ 468-488). Anecdotal evidence suggests further that the MTP has a low profile in wider manufacturing industry.

9.18.  The clearest indication we were given of what the MTP does was by means of an example, that of the set top box. In Mr White's words, "As the product came to the market the first thing that we did was to identify a problem; the second was to bring together the market players… and the third was then to go forward and influence the direction of European policy to enable mitigation of growth of consumption from that product" (Q 476). The result was that the average energy consumption of set top boxes had been reduced from 27 to 12-15 watts (Q 488).

9.19.  The key word here is "mitigation". As Mr White and his colleague Mr Robert Harrison, explained in the context of the MTP's overall targets, the objective appears not to be to reduce actual energy consumption, but to "mitigate" the increase in energy consumption that would otherwise arise from the development of new products (QQ 484-486). The MTP is an exercise in damage limitation.

9.20.  In contrast, when we visited the Ministry for Sustainable Development in Stockholm, we were given a far clearer and more dynamic definition of market transformation: in the words of Mr Arne Andersson, it was "the art of buying what is not available". The steps in the Swedish procurement process were: to define a need; to identify a technical solution and a supplier capable of providing it; to establish a strong group of buyers willing to invest in the new product; and then to bring suppliers and buyers together to develop a dialogue, and ultimately a market demand. Once winners in such procurement processes have been identified, there are prize ceremonies, information campaigns to secure wider acceptance, and if necessary initial subsidies.

9.21.  The Market Transformation Programme is too reactive, too nebulous in organisation and working methods, and too unfocused in its objectives and measures of success. We therefore recommend that the Government review the effectiveness of the MTP, with a view to giving more dynamic and effective leadership to the process of market transformation.

Risk areas

9.22.  Consumers have an apparently limitless appetite for new energy-using products. We are not in a position to predict what new products will emerge in the coming years, but have considered two sectors where there has already been considerable expansion, which is likely to continue, and which present a significant risk to the Government's attempts to reduce energy use.

9.23.  The first of these sectors, which has already been mentioned, is information and communications technology. At our seminar it was asserted by Professor Brenda Boardman, of the Environmental Change Institute, that the expansion of this sector could swallow up all efficiency gains in other sectors. While it is difficult to put firm figures on such possibilities, and Mr Fullam indeed claimed that "smart design" would lead to a "steady reduction in power consumption", he did also concede that consumer electronics were still an "immature market" (QQ 442, 441).

9.24.  The improved efficiency of individual products is unquestionable: as Mr Fullam pointed out, a 19 inch colour television in the late 1960s would consume "something like 525 watts"; an equivalent television today consumes around 60 watts. The problem is not that individual products have failed to improve, but that new products—televisions with larger screens, wall-mounted televisions, flicker-free screens, plasma screens, and so on—have emerged, creating a hugely expanded, diverse market, in which the relative energy efficiency of products is a negligible factor in customer choice.

9.25.  One area of particular concern, which is relatively well documented, is the proliferation of devices which, when not in use, are left in standby mode. As Mr Meier pointed out, power consumption for audio devices in standby mode can vary between one and 25 watts. But, as he continued, "there is no way for a consumer to know which uses 25 watts and which uses one watt" (Q 405). While products bearing the Energy Star label do provide such data, we have already commented on the limited scope of this scheme. Nor are such data in themselves necessarily enough: the consumer's ignorance is all too often compounded by aspects of product design, such as the lack of a simple on/off switch on the front of most personal computers. How many computer users realise that unless they switch off the power supply at the wall their PC will continue to consume electricity?

9.26.  The effect of standby consumption, at a national level, is breathtaking: in the United Kingdom television sets alone consume some 90 million kWh per month in standby mode.[95] This is approximately equivalent to the continuous output of a small—120 MW—power station. It translates into greenhouse gas emissions approaching 150,000 tC/year. Moreover, these figures apply only to televisions, and fail to take account of all the other forms of equipment—audio equipment, video or DVD players, computers, photocopiers—which revert to standby mode when not in use. The Government estimate that overall no less than 760 million kWh per month of electricity are consumed by appliances not actually in use—the equivalent of 1 GW continuous output, or some 2.25 percent of total United Kingdom electricity consumption, producing of the order of 1.2 MtC per annum.[96]

9.27.  The Government's approach to these problems is to encourage manufacturers to reduce power consumption through an EU-wide voluntary code of conduct, best practice guidelines and targets. In addition, the Government's own procurement policies require that departments should specify televisions with standby power consumption of less than one watt. Such an approach appears to overlook the possibility of using regulation to enforce improvements in design and the provision of better information for consumers.

9.28.  The fast-growing, diverse market for consumer electronics presents a serious a risk of uncontrollable rises in energy consumption. The Government's reliance on voluntary codes and best practice guidelines, while it may deliver improvements in certain areas, is a piecemeal and fundamentally inadequate response to this threat. We therefore recommend that the Government examine the feasibility of setting minimum standards for this sector, as well as requiring better information for consumers, for example on standby power consumption.

9.29.  The second danger area we looked at was the growing demand, particularly in the context of climate change, for air conditioning. An extremely clear summary of the state of the air conditioning market was provided by Mr Ray Gluckman, of the Institute of Refrigeration: though demand for air conditioning has grown significantly in the last 20 years, it remains an immature market, with only around 10 percent of non-domestic floor space air conditioned (around 15 percent for offices). Penetration into the domestic market is minimal, at under one percent. It is estimated that in the coming 20 years the non-domestic floor area that is air-conditioned will triple (representing growth of around six percent per annum); the domestic market will grow more quickly in percentage terms, but from a much lower base, with the result that in terms of carbon emissions its effect will be relatively minor.[97] While the efficiency of appliances is improving constantly, Mr Gluckman accepted that "it does look inevitable that the market growth will overtake the efficiency improvements" (QQ 440, 452).

9.30.  Mr Gluckman's conclusions demonstrated the industry's willingness to embrace regulation and mandatory standards—perhaps a result of its long experience of such regulation in the field of refrigeration. He described "a great need for intervention", including minimum efficiency standards by means of a "rating system" (at present, domestic air conditioners carry an EU energy label, but those used in commercial premises or offices do not). There also had to be more detail in Building Regulations, to ensure that speculative developers were "not allowed to put in inferior systems and inferior controls". Perhaps most strikingly, he accepted that there needed to be "some sort of market avoidance policy" (QQ 446, 456, 453).

9.31.  The projected trebling over the next 20 years of the floor area in commercial or office buildings that is air conditioned has serious implications for future energy consumption. We welcome the willingness of the air conditioning industry to engage in discussion on minimum efficiency standards and the development of Building Regulations, and recommend that the Government address these issues as a matter of urgency.

93   The market share of "A-rated" wet appliances has risen from zero in 1996-97 to over 50 percent in 2003-04. See Action Plan, p 63, Figure 8. Back

94   See http://www.eu-energystar.org/. Back

95   Source: Written Answers by Lord Whitty, 3 March 2005 (WA 45) and Lord Bach, 23 June 2005 (WA 187-190).  Back

96   Carbon emissions calculated by reference to Dr Sinclair's calculation of the carbon intensity of electricity generation in 2003 (see Appendix 4). Back

97   An ODPM consultation paper on the impact of climate change upon Building Regulations, which extrapolates data from the United States, estimates that if the temperatures seen in 2003 became the norm, "ownership might rise to between 30 and 40 percent of households in the South East". However, at 2003 temperatures the actual energy consumption for whole-house cooling of a moderately sized dwelling would be only around 30 kWh per year ("Building Regulations Part L: Adaptation Strategy", pp 15-16). Back