Lord Henley: International Energy Agency’s conference “Saving more energy through compliance”

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Lord Henley – International Energy Agency’s conference “Saving more energy through compliance”.

Firstly, welcome to you all. The UK is delighted to be hosting this event, and we’re delighted to see so many nations represented here, and so many manufacturers.

Climate change is one of the gravest threats we face today. It’s a challenge we can only meet by working together globally to reduce greenhouse gas emissions.

It’s a challenge that also presents opportunities. And exploiting these opportunities is necessary - for economic recovery and sustainable, long-term growth.

Six years ago, the global carbon market was virtually non-existent. Last year, World Bank estimates put that market at over $140 billion.

The need for more sustainable and energy efficient products is urgent.

The International Energy Agency has projected that energy efficiency improvements will make the single largest contribution to the goal of halving global energy-related CO2 emissions by 2050.

So designers, manufacturers, suppliers and retailers all have a vital role.

And minimum efficiency standards are a vital tool in improving product efficiency and building a green, low carbon economy.

Within the EU single market, these standards are set through the Ecodesign Directive. Standards for household and commercial lighting, televisions, set-top boxes, fridges and freezers, industrial motors and on limiting stand-by power consumption have already been set. We estimate that by 2020 these standards will be saving around seven million metric tonnes of CO2 each year; and delivering around £850 million of savings, mostly on consumers’ and business’ energy bills.

Once standards are set for other products, and labelling has been developed for white goods and televisions, there will be even more savings to be made.

But in order to be certain these benefits will be realised, we need ways of ensuring that products do actually comply with the standards.

In the UK, a product-testing exercise carried out for my Department last year found that the rate of non-compliance with existing energy efficiency regulations was at least 15% - and for some products was 25% or higher. This rate of non-compliance could risk as much as a quarter of the projected benefits of the standards put in place.

And research in other countries has uncovered similar scenarios.

And this is not acceptable, to consumers, or businesses.

Consumers who are choosing more efficient products - to either save money or to reduce their emissions or both - deserve to be 100% sure that the product they are buying delivers the standard it promises.

Businesses - whether they be manufacturers, retailers or importers - need to be sure they are competing in a fair market and that others are not gaining an advantage by selling cheaper, sub-standard products. Businesses that operate fairly must be protected.

The UK Government does not believe that the heavy-handed imposing of rules and regulations from above is the best way of changing people’s behaviour. Instead we want to encourage, support and enable people to make better choices for themselves.

Underpinning all of our work on compliance is a dedication to awareness-raising and effective communication between regulators and business.

We are also committed to risk-based enforcement, that is, to focus our enforcement activities on those most likely to merit them, and not burden fairly operating businesses unnecessarily.

We believe that most businesses want to comply and the focus is very much on helping business to achieve this compliance.

To give you an example: a recent exercise was conducted by our enforcement body, the National Measurement Office, to evaluate the energy efficiency claims made on lamps available through major high street distributors.

The results showed that around 5% of checked lamps were mislabelled. But the reasons for this mislabelling were easy to resolve. In some cases the energy classes had been wrongly calculated, and in others the wrong label was accidentally put on the product.

When informed of the findings by the National Measurement Office, all the companies involved readily agreed to fix the mistakes and re-label the products to bring them back into compliance.

We are continuing to look at how we can further improve our compliance regime. Of course there is still a need for penalties - for frequent offenders or for those who deliberately break the rules.

For example, only a few weeks ago our Trading Standards Officers in Northampton successfully prosecuted an importer of fridges which were labelled with an A+ energy rating but when three were tested were E, F and E respectively. Their energy consumption was, on average, some 77% higher than shown on the label. This would represent a significant difference on a consumer’s electricity bill.

We are currently considering the responses to a public consultation on the possible introduction of a new range of civil sanctions, which include enforcement notices, and, for the worst cases, monetary penalties, which reflect the harm caused to consumers and the environment.

I’ve been talking about the UK’s national work. In today’s marketplace products are both manufactured and traded globally. Therefore only collaboration on a global scale can ensure that we gain the benefits from more efficient products and equipment.

And the fact that so many of you have travelled here today proves that this is widely understood.

Collaborating internationally not only avoids the wasted cost of duplicated activity but ensures there are no safe havens for suppliers of non-compliant products.

The UK Government will push for the EU to demonstrate leadership in tackling international climate change. And this includes setting appropriate energy performance standards for key products.

The EU already has an official forum for sharing compliance knowledge and expertise, and we are working together on strengthening our compliance regimes.

The UK currently chairs this Administrative Cooperative Group - ADCO - for market surveillance of Ecodesign. The ADCO is attended by the 30 national enforcement authorities of the EU and European Economic Area.

Enforcement authorities are using this forum to agree the enforcement of the regulations, to share best practice and to exchange intelligence on products, to share plans for product testing and to work towards a proposal for a joint testing programme which will make good use of limited resources. All of this helps align and strengthen market surveillance across the EU.

I would say that the ADCO’s experiences offer a good example of what could be achieved internationally, not only at EU level.

So what is there to do at global level to improve monitoring, verification and enforcement?

I would like us to share best practice on how to ensure compliance and so deliver greater benefits from energy efficiency standards. I would also like to see greater sharing of intelligence between enforcement agencies on products that are globally traded and do not meet the claims they make.

I would hope that, by the end of this conference, we will be much closer to a shared understanding of the successes and challenges ahead. I look forward to hearing the conclusions reached this week, and to the future actions and improvements set in motion by this conference.