Gas Appliance Energy Efficiency Labelling

Modelling Results

The modelling results indicate that the gas labelling scheme, if made a national E3 scheme in Australia and introduced in New Zealand, would be cost effective if realistic assumptions are made about the behavioural change that the scheme would produce in consumer product selection.

For Australia and New Zealand, if 1% of consumers make a purchase which results in them installing a product which is 5% more efficient than they would have otherwise chosen, the energy costs savings benefits will exceed the costs of the Australian scheme. In both countries it appears highly feasible that an effective gas labelling scheme could induce this level of behavioural change, even given the extent that consumers are excluded from many gas appliance purchase decisions.

Assuming these minimal levels of behavioural change occur, then the resulting discounted costs, benefits, energy and emission savings are as shown in the table below. It is worth noting that the behaviour of the consumers has been adjusted to make the benefits match the costs of the program, so large net benefits should not be expected from the modelling analysis. If the labelling programs have greater impacts, which is entirely feasible, then the net benefits will be larger.

Table : Benefits and Costs of Labelling Scheme with Minimal Behavioural Impacts

Country	Benefits	Costs	Net Benefits
Australia	$5,977,698	$5,932,347	$45,351
New Zealand	$2,404,980	$2,392,352	$12,629

The energy and greenhouse emission impacts are shown below.

Table : Benefits and Costs of Labelling Scheme with Minimal Behavioural Impacts

Country	Energy Savings (GJ)	Greenhouse Emission Savings (CO2-etonnes)
Australia	648,712	38,023
New Zealand	92,509	5,551

10. Conclusions

The analysis of the options for gas labelling in Australia indicates that changing the present industry led labelling scheme to a mandatory energy efficiency labelling scheme under the management of the E3 program is the most desirable option. While a labelling scheme currently operates in Australia as part of gas appliance certification, there are some significant problems with the existing scheme including:

lack of a rigorous compliance and enforcement regime.

lack of accountability for the operation of the scheme, as there is no government or industry body responsible for maintaining the scheme, ensuring its integrity and driving improvements.

current test standards and labelling algorithms have become out-dated and are not accurate or repeatable enough to form the basis of a regulatory regime.

no requirement to re-label or re-certify appliances when methods of test and labelling requirements change.

By enabling the labelling scheme to be managed centrally and by assigning the authority and responsibility of the scheme to the E3 program, the Australian gas labelling scheme will be able to receive the management attention and resources it requires to operate effectively. This change will enable the scheme to be properly promoted, deficiencies in the scheme to be attended to and for enforcement of compliance to be undertaken.

Preliminary consultation with industry stakeholders indicated that they already consider that there is a mandatory gas labelling scheme in place in Australia, but there is still some interest in it being improved. In New Zealand, generally industry stakeholders saw introducing a labelling scheme as challenging but they are also keen for there to be consistency with any Australian scheme.

Modelling has shown that if the proposed mandatory gas labelling scheme only influences 1% of relevant appliance purchases in the first 3 years of the scheme, so the consumer chooses an appliance 5% more efficient than they would otherwise have done, then the benefits of adopting the scheme in both Australian and New Zealand will exceed the costs of such as scheme.

Introducing the scheme to New Zealand would enable consumers to make informed decisions about their gas appliance selection, removing an existing distortion or failure of the market. The cost of introducing the scheme to New Zealand for appliance suppliers is relatively low, as the vast majority of gas appliances the scheme is expected to cover are already tested to the relevant Australian Standards. Government costs would be limited to scheme promotion, management and compliance costs, assuming the Australian labelling scheme design is adopted.

Given these findings, there appears to be sufficient arguments that the implementation of a trans-Tasman Government energy rating labelling scheme for gas products to be further progressed. A Regulatory Impact Statement should explore the unbundling of the gas product safety regulations from the energy efficiency regulations in Australia, and the moving of the responsibility and authority of managing the current mandatory gas labelling scheme to the E3 program. Exploring the introduction of a mandatory labelling scheme should extend to New Zealand with the scheme based on a joint (E3) gas labelling program. For both countries, the introduction of the new mandatory gas labelling scheme could be done together with the introduction of MEPS for the relevant appliances if practical, as this would significantly reduce the labelling scheme costs and improve its cost effectiveness, while also addressing some of the split incentive issues.