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Accelerating the Adoption of Second-Tier Reach Standards for Applicable Appliance Products in China

26-May-2007

Published in March 2007. This work was supported by the Ministry of Economy Trade and Industry and the Institute of Energy Economics, Japan.

Background:
The minimum energy efficiency standards program for household appliances in China was initiated in 1989 when the former State Bureau of Technical Supervision announced the first batch of efficiency standards for eight consumer products. Since 1996, CLASP and its implementing partner, LBNL, have assisted China in developing 11 minimum energy performance standards (MEPS) for 9 products and endorsement labels for 11 products including: refrigerators; air conditioners; clothes washers; televisions; printers; computers; monitors; fax machines; copiers; DVD/VCD players; external power supplies; and set-top boxes (under development).

Increasingly, attention is being placed on maximizing energy savings from China’s standards and labeling efforts in order to meet the recently announced goal of reducing China’s energy intensity by 20 percent by 2010—a part of China’s reorientation to decreasing its rapid rate of growth in energy consumption.

Before 2003, China’s traditional approach to standards development involved small increases in efficiency requirements for implementation within 6 months of a standard’s approval. Since 2003, China has adopted a new approach in setting efficiency standards. This new approach involves the development of two tiers of standards—one for initial implementation and a second tier at a more aggressive level of energy efficiency for implementation three to five years later. The second-tier standard is also referred to as a “reach standard.” The lag between the adoption and implementation of the reach standards gives manufacturers time to re-design their products and to re-tool their production facilities. Thus, it is easier for manufacturers to comply with a more stringent efficiency level. This practice has been very effective in the US MEPS program and Japan’s Top Runner Program.

Reach standards have now been developed in China for: color TVs; refrigerators; air conditioners; and external power supplies. A summary of the Tier 1 and Tier 2 standard requirements is listed in Table 1.

The development of the reach standard is a major milestone in China’s standard program. Besides specifying increased energy savings at some future date, it offers a potential avenue to further increase energy savings by accelerating the adoption of the second tier reach standards for applicable products.

CLASP, with the support of the China Sustainable Energy Program (CSEP) of the Energy Foundation (EF), has previously participated in a pilot program to support the city of Shanghai to accelerate the adoption of the second tier reach standard for room airconditioners in Shanghai prior to national implementation. In light of Shanghai’s severe electricity shortage in 2004 and 2005, this approach promised both to save energy and to reduce Shanghai’s peak load challenge.

Table 1: Reach Standard Requirements in China

Tier 1 Tier 2
Refrigerators (220
liters)
2004, 1.34 kWh/day 2007, 1.21 kWh/day
Air-conditioners
(<4500W)
2005, EER>=2.6 2009, EER>=3.2
Color televisions
(CRT)
2005, EEI=1.5 Standby<=9W 2008, EEI<=1 Standby<=3W

External power
supplies 
watt 
0

1<=Po <49

49<=Po <=250 

0 <="10">10<=>

 

2007

Efficiency 
0.39 × Po

0.107 × ln Po + 0.39

0.82 
Standby (watt) 
0.75 
1

2009

Efficiency 
0.49 × Po

0.09 × ln Po + 0.49

0.84 
Standby (watt) 
0.5 
0.75


However, the project has encountered both policy and market barriers. On the policy side, China’s existing law on standard development stipulates that national standards supersede local standards, so Shanghai's authority on standards could not issue a more stringent local standard for room air-conditioners.1 Fortunately, China is in the process of revising its Energy Conservation Law (ECL). This represents a major opportunity for addressing this policy barrier. With the support of funding from Japan's Ministry of Economy Trade and Industry (METI), CLASP is continuing to work with policy-makers both at the central and local level to advocate for the inclusion of a clause that would allow local authority to set more stringent energy efficiency policies. There is a precedent. In the area of environmental regulations, municipalities and provinces are already allowed to have stricter requirements, such as emissions standards for automobiles.

Cost premiums for the more efficient room air-conditioners are also a major barrier to the accelerated adoption of the reach standards. Air-conditioners meeting the reach standard are priced up to 50% more in retail in Beijing and Shanghai partly due to the fact that these air-conditioners are only a small share of the market at present. Thus, implementation of the reach standard will negatively impact the immediate welfare of some consumers. With METI’s support, CLASP is working with Shanghai local authorities to explore options to mitigate the cost premium of more efficient appliances.

For example, CLASP's partner in Shanghai, the Shanghai Energy Conservation Supervision Center (SECSC), continues to advocate consumer rebates to encourage the purchase of more efficient air-conditioners. CLASP is working with SECSC to determine the appropriate level of incentive. In addition to government funding, we are also exploring other sources of funding such as demand-side-management (DSM) programs and the clean development mechanism (CDM). In the former case, consumer rebates for more efficient air-conditioners would be a part of local DSM offering. In the latter case, energy savings and related carbon emission reductions from the adoption of more efficient air-conditioners could be sold to interested buyers of carbon credits, and the revenue would be used to pay for the consumer rebates.

At the time of this report, the Shanghai government is still committed to the adoption of the reach standard in 2007, but likely on a voluntary basis. To assist the uptake of more efficient air-conditioners, the Shanghai government is considering budgetary allocations to support consumer rebates for air-conditioners that meet the reach standard. It also seems likely that the cost premium would come down significantly if the reach standard took effect: some manufacturers have already indicated that if there is a sufficient market, the cost premium could be reduced from the current 50% to about 20-25% (SECSC, 2005). This is a classic “chicken and egg” situation. However, SECSC believes that a combination of consumer rebates and bold marketing from a few manufacturers could break the current stalemate. The International Copper Association (ICA) has shown keen interests in supporting this effort and promised to identify and engage interested manufacturers, since the more efficient air-conditioners would use more copper.

With METI’s support, we are also working with China’s mandatory energy information label program to obtain and analyze label registration data in order to learn the distribution of the energy efficiency of household refrigerators and room air-conditioners currently in the marketplace. Such an analysis will help assess how many products are already meeting the reach standards in order to evaluate the burden on manufacturers to meet the reach standard and the feasibility of accelerating the adoption of these standards throughout China.

This report is presented in five sections. After the introduction, Section 2 analyzes the distribution of the efficiency of refrigerators and air-conditioners in China based on data collected by the China Energy Label Center for the mandatory energy information label program. The results provide an assessment of the adoption of reach standards for these two products. Section 3 summarizes on-going collaborations with Shanghai and presents both the impact and an analysis of barriers to local adoption of reach standard for airconditioners. Section 4 offers suggestions for local governments on how to move forward in adopting reach standards in their localities and concludes with a summary of the results and a plan for developing local capacity in order to achieve success in adopting reach standards.

Authors: Jiang Lin & David Fridley; Lawrence Berkeley National Laboratory