Consultation and Decision Regulatory Impact Statements: Household Refrigerators and Freezers

Downloading the PDF Version

The full document is available as a PDF file. You will need Adobe Acrobat Reader installed on your computer to view it. The Adobe Reader is a free product.

Download Consultation Regulatory Impact Statement of proposed revisions to the method of test and energy labelling algorithms for household refrigerators and freezers - June 2008 (3.1 MB)

Download Decision Regulatory Impact Statement: Household Refrigerators and Freezers - October 2008 (1.4 MB)

If you are unable to access this document, please contact the The Department of the Environment, Water, Heritage and the Arts to organise a suitable alternative format.

Summary

This is a consultation Regulatory Impact Statement (RIS) which examines the impacts arising from a proposal to change the star rating algorithm for the energy rating labelling system for refrigerators and freezers. The proposed regulation is an element of the Equipment Energy Efficiency (E3) program, which is an initiative of the Ministerial Council on Energy (MCE) forming part of both the Australian National Framework for Energy Efficiency and the New Zealand National Energy Efficiency and Conservation Strategy.

This report was prepared by Energy Efficient Strategies for E3 in consultation with the Department of the Environment, Water Heritage and the Arts and the Energy Efficiency and Conservation Authority of NZ.

Conclusions and Recommendations

The case for a change of algorithm for the energy star rating of refrigerators and freezers for the Australian and New Zealand market has been clearly set out in this Regulatory Impact Statement and the need for this is widely acknowledged and supported by industry. For both refrigerators and freezers, the market is tending towards a majority of products having star ratings that are bunched around the range of 3.5 to 5 stars. Market research demonstrates that consumers use the star rating labels in purchase decisions and that it also provides suppliers with a means to differentiate their product with a view to increasing market share. To enable the labelling program to continue to be an effective tool for all stakeholders over the next decade, a change in the star rating algorithm is required.

The key elements of the proposal and associated changes are:

A new energy labelling algorithm which decreases star ratings by about 2 stars in order to encourage greater efficiency at the higher star ratings will be introduced in 2010.
Transition arrangements will enable suppliers to register and re-label their products early, but all refrigerators must be tested and registered to the new standard AS/NZS4474.1-2007 with the new energy label by April 2010.
A revision of the Part 2 standard, which will go through the normal public comment process, will implement the changes. The key elements are a new energy label design and a new associated labelling algorithm. A range of other changes (unrelated to this RIS) will be included such as the change in the definition of MEPS from a model average energy to a maximum permitted energy and a reduction in the check testing tolerance from 10% to 7.5%, in order to improve reported energy consumption claims.

Intensive modelling and analysis on the effects that the algorithm change would have on the refrigerator and freezer market and on product prices has been undertaken in this report. It was found that even with the worst case scenario of doubling consumer costs due to efficiency increases (Scenario F), the cost-benefit ratio for the Program will still remain at around 1. This indicates that the analysis and modelling underpinning the algorithm change and associated market effects is robust (in all likelihood no perceptible price rise will result from the small increases in energy efficiency that are expected). The cost-benefit ratio of the Program for 1.7 Australia (7.5% discount rate) and 2.7 for New Zealand (5% discount rate) under modelled Base Case conditions. In the current policy climate, scenarios with real increases in either energy tariffs or the introduction of some pricing structure for CO2 are more likely; in both of these cases the cost-benefit ratio increases above the Base Case.

This proposal is required to ensure that the energy labelling program continues to be an effective measure for both consumers and suppliers in the refrigerator and freezer market. The mandatory introduction of the revised test method AS/NZS4474.1-2007 has wide support from industry and will provide greater certainty and credibility to the program and will reduce anti-circumvention by some suppliers. The introduction of the test method change has been bundled with the energy label and star rating algorithm change in order to minimise costs to industry.

The recommendations from this report are:

New energy labelling algorithms be implemented in a revision of AS/NZS4474.2 for refrigerators and freezers as set out in this report.
Test reports to AS/NZS4474.1-2007 to be required for all registrations or listings which use the new energy label and the new algorithm in the revised Part 2.
All products manufactured or imported after 1 April 2010 will be required to carry the new energy label and have a current approved registration/listing for this label.
Transition arrangements over the period April 2009 to April 2010 as set out in this report be implemented.
All new registrations from October 2009 to require the new energy label.
A retailer communication package to be developed to ensure that new energy labels to appear on all new products on display as far as possible by April 2010.

Related and Subsequent Reports

A detailed Discussion Paper on the likely form of the new star rating algorithms for refrgierators and freezers was released in September 2007. This document provides much more detail on the proposed equations for star rating.

A Cost Benefit Analysis preceeded this RIS and was released in December 2007.

A Decision Regulatory Impact Statement: Household Refrigerators and Freezers was released in October 2008.

This page last modified 13 January 2010