Empowering Efficiency: Lessons from Pakistan’s Energy Labeling Journey

Solution: In 2016, CLASP and local partner SAMA^Verte initiated a 3-star voluntary label⁶ for ceiling fans in homes and businesses. The label’s development included policy creation and program design. It aimed to provide technical specifications and energy performance grades to assist buyers, particularly government procurement agencies, in selecting efficient fans to cut long-term costs and lower cooling sector emissions. The label was introduced as voluntary due to initial skepticism in Pakistan’s cultural context and opposition to a mandatory scheme from manufacturers.

The labeling program is a nationwide initiative led by NEECA, with Punjab playing a key role. Punjab supported a launch campaign exceeding $1 million and continues to drive fan purchases through procurement programs. All Punjab activities are coordinated through the Punjab Energy Efficiency and Conservation Agency (PEECA), under the Provincial Energy Department.

Developing the label involved engaging multiple stakeholders, including manufacturers (both bilaterally and through their association), the standards organization (PSQCA), and public testing labs such as the Pakistan Council of Scientific & Industrial Research (PCSIR).

Significant headway was achieved during the project, engaging 20-30 manufacturers to produce quality fans qualifying for the 3-star label. The program sold 700,000 efficient fans, with 95% through government procurement. It also prompted local electrical appliance manufacturers to recognize energy efficiency’s significance and the need for improvements.

Despite successes, progress post-program in 2017 was slow, with NEECA encountering challenges in asserting its influence. Nonetheless, In July 2023, mandatory Minimum Energy Performance Standards (MEPS) were officially enacted. However, compliance has not been established at this point. In tandem, two supplementary performance tiers were incorporated, thereby transforming the system into a comprehensive 5-tier star rating mechanism.

Impact

The energy efficiency label acted as the first step in achieving appliance efficiency in Pakistan and resulted in the following improvements:

Efficient ceiling fans led to estimated lifetime savings of $2,200 USD for small households and $6,600 USD for larger households and SMEs, which is significant in a country where the average monthly salary after tax is around $140 USD.

The market average efficiency of fans has improved, mainly owing to the advent of AC/DC hybrid fans and their growing popularity, especially in weak grid regions. These fans inherently consume less electricity than regular AC fans but work where AC fans cannot due to their hybrid nature. Additionally, there were also efficiency improvements in AC fan performance.

Initiation of bulk replacement programs: During the program’s second phase in 2017, a detailed plan was developed to replace 1.2 million fans in all educational and health institutions in Punjab. The plan was well received by the government, but implementation stalled due to lack of funding. The replacement program is finally going ahead with funding from the World Bank. A larger federal program is also being considered.

Initiation of retrofitting programs: A number of retrofitting programs kicked off towards the end of the project or soon after. These were run mostly by PEECA [Punjab Energy Efficiency & Conservation Agency]. Coupled with LED lights, retrofitting programs supported the replacement of 100,000 fans. Old fans were irreversibly disposed of to avoid entering back into circulation via the secondhand market.

Lessons Learned

Pakistan’s efficiency label experience underscores that technical aspects of programs are often simpler to handle whereas political and governance issues alongside budgetary constraints can often greatly impede the efficacy of government-led initiatives. These were the key lessons learned:

• Continuity and support from government leadership are critical to national labeling success: However, the label’s effectiveness was hindered by leadership instability, due to frequent shifts between ministries. As such it has not been able to present the case for energy efficiency at the highest levels within the government in a coherent and persuasive manner.
• Broad stakeholder engagement including engagement of industry in the labeling development process is key to adoption.
• Lack of promotional budgets: Once the label was launched, some of the large fan producers [the big 4, Tier 1 manufacturers with 48% market share at the time] came out with high-cost promotional campaigns to raise awareness of the availability of superior fans. However, these stopped quickly as the suppliers wanted stronger and bigger reciprocation from the government which could not allocate sustained funds for such campaigns. Consumer awareness was quickly lost.
• The direct impact of the label was limited due to its voluntary nature and lack of visibility to the consumer. It is advisable for appliance standards to be introduced as mandatory, to improve the likelihood of success.
• Strategic resource management: While implementation of the bulk procurement program has been delayed, the timely allocation of time and resources enabled a successful initial development of the program. This initiative serves as a model for similar schemes in the public domain at both federal and provincial levels.