New European Union Energy Label Slows Down Sales of Energy-Saving Appliances

The European Commission makes a second attempt to introduce a new energy label for electric appliances. This label is to encourage the European consumers to buy energy-saving appliances. However, there are some signs that the second attempt will not be successful either. If an appliance carries the new energy label instead of the existing European Energy Label, low energy consumption does not have a great impact on the consumer decision. Consumers are not willing to pay more for an energy-saving appliance if it is labelled with the new energy label. These are the findings of a study by Stefanie Heinzle and Rolf Wüstenhagen (University of St. Gallen) within the research project seco@home that is coordinated by the Centre for European Economic Research (ZEW) Mannheim. The study compares TV sets with the existing European Energy Label and the new energy label as well as the labels’ impacts on consumers.

The study is based on 2,244 customer decisions which were collected by GfK Group. The survey participants were divided into two groups with similar social-economic backgrounds like similar income, age and gender. The survey participants had to choose between different TV sets in a computer-based simulation. The appliances differed in technology, brand, price and energy consumption. Both consumer groups could identify the energy consumption by the energy label. The existing European Energy Label was shown to the first group. At present, there are energy efficiency categories from A to G. The dark red label G indicates the highest energy consumption, the dark green label A indicates the most efficient appliances. The new energy label proposed by the EU was shown to the second group. This label adds the categories A+, A++ and A+++ to the energy efficiency categories A to D. The most efficient appliances now carry the label A+++.

The survey result indicates that consumers in the second group, who had to choose from appliances with the new label, did not consider the energy consumption as important for their purchase decision as consumers in the first group. The most important buying criteria in both groups are the TV set’s price, followed by energy efficiency, technology and brand. The survey results show, however, that the existing European Energy Label with the categories G to A has greater impact (by more than ten percentage points) on the consumer decision than the new energy label extended by A+ to A+++. The price has greater impact on the consumers in the second group (by more than eight percentage points) than in the first group.

The survey participants in the first group were willing to spend more money for an energy-saving TV set than second group. In the first group, consumers would on average pay 133 euro more to buy an appliance with the energy efficiency category A instead of B. In the second group, consumers would only pay 49 euro more to by a TV set with the energy efficiency category A+++ instead of A++. This result indicates that the consumers prefer buying reasonably priced appliances rather than energy-saving ones.

The first proposal to revise the energy label proved to be a failure

The latest survey results mostly match a survey which was conducted by Heinzle and Wüstenhagen last year. They had then surveyed the European Commission’s first proposal to revise the label. The proposal also included further categories: A-20%, A-40% and A-60%. The first survey suggested that the new categories have no impact on consumers as they prefer the existing European Energy Label with the categories A to G. The European Commission withdrew the proposal and decided to propose the categories A+ to A+++ instead. The latest survey result now indicates that the European Commission’s second proposal is not better than the first one.

Wüstenhagen explains: "The energy label aims at increasing the importance of energy efficiency when buying new appliances. However, the proposed energy labels extended by the categories A+ to A+++ or A-20% to A-60% will probably lower the energy label’s impact on consumer decisions. This makes the situation more difficult for innovative manufacturers to have success with energy-saving products on the market."

Dr. Klaus Rennings, who is coordinating the research project at the Centre for European Economic Research (ZEW) in Mannheim, says: "Technological advancements lead to more appliances with high energy efficiency labels. The actual energy consumption of each appliance varies in the higher efficiency classes. The new label conceals these differences. The consumers consider the energy label A to have high energy efficiency. Why should customers spend a lot more money for an appliance with the label A+++ than for an appliance with just an A? The problem could be easily solved if the criteria for the efficiency categories were dynamically adjusted to the technological innovations. Then there would be no need for new categories."

For further information please contact

Dr. Klaus Rennings, Phone: +49 (0)621/1235-207, E-Mail: rennings@zew.de