Free Markets versus Regulation: How to Improve the Efficiency of Standby Power Appliances

Panel: Panel 3: Energy Efficiency options for industry

Author:
Horace Herring, Open University

Abstract

Which is the best way to improve energy efficiency of brown goods: compulsory energy standards and labelling, voluntary agreements with manufacturers, or to do absolutely nothing?

In many European countries domestic electricity consumption is rising despite saturation in ownership of major white goods. Part of the reason for this growth is the increasing proliferation in the home of brown goods, mainly TVs, videos, hi-fi equipment and other electronic appliances that nearly all use standby power.

This paper looks at policies for reducing standby power loss in brown goods. Although European researchers have identified a large technical potential for reduction, the main problem is getting manufacturers to adopt ?est practiceƒ. One approach favoured by some governments is to overcome ?arket failuresƒ, through provision of information and voluntary agreements with manufacturers. Another solution, advocated by more interventionist governments, is regulation, through introduction of mandatory efficiency standards and labelling schemes.

This paper first surveys the EU policies put forward for improving efficiency in brown goods. It then questions whether voluntary agreements can be effective in the existing highly competitive EU market, which is facing increasing challenge from low cost Asian producers. Finally it questions whether policies based on overcoming ?arket barriersƒ can be successful, and argues that these policies are just a reflection of some European Governmentƒs political ideology of ?ree marketsƒ. It concludes that the policy of relying on competition to produce energy savings produces a very uncertain result.