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Energy Efficiency Labels to be Revised after Hard Fought Negotiations

On 21 March 2017, the EU Council and Parliament finally brokered a deal on the text of a Commission proposal to reform energy efficiency labels placed on household products such as refrigerators, cooking appliances and televisions.

The deal puts an end to the intense rounds of informal ‘trilogue’ negotiations between the EU’s three main legislative institutions – the Council, the Parliament and the Commission – which commenced in July 2016. The Commission first tabled the proposal in July 2015.

Prior to the March meeting, the institutions had undergone three trilogues (in July, September and October 2016) and several series of technical meetings at which they managed to reach provisional agreement on scope, definitions, market surveillance and harmonised standards. However, many of the proposal’s more challenging matters were left unresolved.

The proposal, as agreed upon, revises the EU’s requirements for energy labelling in order to return to an A to G energy labelling scale, which is believed to be more easily understood by consumers. Current energy efficiency labels generally rank products from H, the least efficient class, to A+++, the most efficient. The proposal therefore consists of scrapping the top three classes (A+, A++ and A+++) which were added after technological developments had over time pushed most products into the A class.

Hong Kong sellers should take heed of the time-lags before entry into effect of the revised labels: white goods, such as refrigerators and washing machines, will be among the first products to receive the new revised labels, which will be displayed from 2020. This is on the basis that rescaling will take place within 15 months while appearance of the label in shops may take an additional 12 months.

For most other products, the rescaled labels will be displayed on products in shops from late 2024; specifically, there is a deadline of 6 years for rescaling and an additional 18 months for display. However, heating products such as heaters and boilers will not have to display the revised labels until somewhere between 2026 and 2030.

During negotiations, it became clear that those longer deadlines, which were demanded by the Council of Member State ministers, would become a major point of contention for the European Parliament. The latter institution expressed concern that having two labels displayed on products for such a long interim period could cause confusion for customers. Nevertheless, it eventually conceded to the Council’s demand to secure longer deadlines for implementation.

The EU legislative institutions also agreed that the energy labels for products should be revised once 30% of models in a particular product group fall within the highest A class, or, alternatively, 50% fall within the top two classes.

The top two classes of these revised labels will at the beginning be deliberately left empty to take account of the rapid pace of future technological development. This measure should allow the Commission to avoid repeating the readjustment exercise for labels more often than every 10 years.

Interestingly, the politically divisive question of what type of act should be used by the Commission to develop secondary legislation under the proposed Regulation was resolved in the Parliament’s favour. As per its demand, it was agreed that delegated acts would be selected as the chosen means. Delegated acts are significant because they give both the Parliament and the Council the right to veto the Commission’s proposals. The Council had originally favoured the use of implementing measures which only give Member States the opportunity to scrutinise the Commission’s acts.

The agreed-upon text of the proposal also foresees the introduction of a product database which has a dual function and which is hoped to be in operation by January 2019:

  • The publicly available part of the database will focus on user-friendliness and is expected to contain a complete bank of energy efficiency labels belonging to different products. This feature will allow customers to more easily compare the energy efficiency of appliances.
  • Traders should be made aware that a “private” side of the database will also be set up to assist Member States’ market surveillance enforcement activities. Specifically, it will allow national enforcement authorities of all Member States to more easily ensure that efficiency calculations displayed on labels actually correspond to manufacturers’ declarations.

The proposal also introduces special measures to take account of smart appliances and software updates, and an explicit ban on defeat devices.

One notably absent provision from the agreed-upon text is the requirement for suppliers to compensate consumers for the cost of additional energy consumed by a product where they have mislabelled the product as belonging to a better energy class then it actually does. Environmental groups and the Parliament unsuccessfully pushed in favour of this consumer right to compensation, so as to ensure manufacturers could not evade liability for their non-compliant products. The Council adamantly refused to include the provision in the final text.

Despite its absence, the text of the proposal has been broadly welcomed by both consumer and industry groups. EuroCommerce, a group which represents six million retail, wholesale, and other trading companies, has welcomed, in particular, the simplification of the energy labelling rules.

Following the agreement between the EU’s legislative institutions, the text will now have to be formally approved by the Council and the Parliament. This means that the Parliament will have to adopt the text at a plenary session, while the Council will do so at a formal meeting of Member States’ Ministers. Once both steps are complete, the revised Energy Efficiency Labelling Regulation will be published in the Official Journal.

Content provided by Picture: HKTDC Research
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