Appendix A: Analysis and Assessment of Individual Measures

1.2 Energy Efficiency Regulations and Phasing Out Inefficient Incandescent Light Bulbs

Table 5: Summary of Analysis for Energy Efficiency Regulations and Phasing Out Inefficient Incandescent Light Bulbs

Summary of the Initiative and Emissions Projections

As part of the Regulatory 2009 Plan, the government proposed to update existing standards for 12 product categories, and introduce new energy efficiency standards for 20 more between 2007 and 2010, as well as introduce an effective ban on incandescent light bulbs that would begin in 2012. A proposed regulatory amendment was published in the Canada Gazette, Part I, on March 29, 2008, and the Amended Regulations were published in the Canada Gazette on December 12, 2008.

Analysis

The analysis framework has not changed appreciably since 2008. According to the methodological document provided by NRCan for the purposes of this evaluation, the emissions reductions provided in the Plan were calculated through analysis of the market share of products currently permissible that would not be in compliance with the new standard. Assuming that the sales of these products would translate to sales of new appliances meeting the standard, the emissions reductions are then calculated. No consideration was explicitly given to the rebound effect, which likely leads to an overestimate on the order of less than 15%.[37] Importantly, the estimates provided by NRCan are decreased by a factor of 15% from the computed values to "accommodate risks to the outcome." This risk factor would likely be sufficient to accommodate error due to the rebound effect if no other delays or changes affect the implementation of the regulation. However, as there are empirical studies of rebound effects for most of the regulated products including residential heating and clothes washers, and these estimates are not consistent across all product groups, it would be desirable for these to be included specifically.

Reducing emissions by improving efficiency standards targets the capital stock of energy-using appliances. As such, estimates of energy savings must take account of three elements. First, the rate at which the new, more-efficient appliances will replace older, less-efficient models must be calculated. Second, the intensity of use must be compared to the older, less-efficient models. If more-efficient appliances are larger or are used more, the energy savings accruing over a year will be less than the difference in efficiency of the two units. Finally, there is the possibility that the new device will replace the old one, but that the old device will be used elsewhere in the home; in the 2008 NRTEE report, this was denoted the beer fridge effect. In this case, the purchase of the new appliance will increase household energy consumption rather than reduce it (unless the household also replaces an even older beer fridge). The estimates provided for the emissions reductions from regulatory policies do an excellent job of accounting for the rate of capital turnover in the primary appliance stock; however, there is little evidence paid to whether the increased efficiency will result in greater numbers of the appliance being in use throughout the country or whether the number of appliances in secondary use will change.

A significant proportion of the reductions in 2012 are due to the introduction of an effective ban on incandescent light bulbs that will not be able to meet new standards for energy efficiency. In its 2007 Response, the NRTEE pointed out that estimates of 4.1 Mt of carbon-emissions reduction could only be achieved through a complete replacement of all light bulbs on January 1, 2012. This figure was adjusted in the 2008 Plan to reflect the longer period of capital turnover required to realize all of the reductions. In the 2009 Plan, the estimated emissions reductions have not changed significantly in this regard.

The estimates in the Plan also include the impacts of EnerGuide and ENERGY STAR labelling programs. Consumer awareness plays an important role in driving energy-conscious behaviour. Both EnerGuide and ENERGY STAR labels are household names in Canada, and Canadians do take these labels into account in purchasing decisions. To what degree they do so is speculative. NRCan has compiled survey evidence to suggest that labels account for energy savings equivalent to 30% of the effects of regulations. This estimate may be optimistic; as regulations get tighter, the impact of labels would likely decrease as most products on the market are at the higher-efficiency end of the spectrum. Of further concern is the fact that ENERGY STAR is an international labelling initiative. Natural Resources Canada promotes the international ENERGY STAR symbol in Canada and monitors its use. As such, it would be inaccurate to claim that all of the benefits of ENERGY STAR labels in the marketplace are due to the actions of NRCan. Reporting the benefits of separate programs — labelling and regulations — would increase transparency.

Conclusions

Given the fact that the estimates provided do not account for the rebound effect of increased intensity of use or increased total appliance stock through the beer-fridge effect, the projected gains from improved standards remain likely overestimates of actual reductions.

<< Previous page | TOC | Next page >>

_______________________

37 Empirical evidence cited in the 2007 and 2008 NRTEE responses suggests that the rebound effect is important. A study by Davis (2007) shows that when randomly chosen homeowners are given washers that are on average 48% more efficient in terms of energy use, total resulting energy (and emissions) reduction is just 42.4% rather than 48%. Additional studies by Hausman (1979), Dubin and McFadden (1984), Dubin (1985), Dubin, Miedema, and Chandran (1986) show similar patterns of increased usage intensity after the acquisition of more efficient appliances. As NRCan documentation suggests, program design and messaging can only partially offset these behavioural changes, and so an adjustment factor should be included to address the residual effect.