S&L 101

Nations traditionally classify their final energy consumption into three sectors--buildings, industry, and transportation. In residential and commercial buildings, energy is consumed by appliances, equipment, and lighting. In homes around the world, energy is consumed by everything from refrigerators and clothes-washing machines to garbage compactors and desktop computers, all in ever-increasing numbers. In office buildings, energy is consumed by everything from computers and copiers to water coolers and photosensor-controlled lighting, also in ever-increasing numbers. Heating and cooling equipment-- often out of sight--is a collection of energy-consuming equipment as well. The energy-efficiency labeling and standards-setting programs described in this guidebook are intended to reduce the energy consumption of all of these products without diminishing the services they provide to consumers.

Worldwide, people consume 422 Exajoules (EJ) or 400 quadrillion British thermal units (Btus) of marketed energy. This energy consumption contributes about 25 to 30% of energy-related CO2 emissions, accounting for 26% of all anthropogenic CO2 emissions and 14% of our net contribution to climate change from all greenhouse gases. The use of energy in human activities related to buildings, including the use of appliances, equipment, and lighting, accounts for 42% of total energy consumption (including the use of biomass) and 36% of total energy-related CO2 emissions. Industrialized countries consume half of this energy; the remainder is consumed by the rest of the world.

The above numbers are a snapshot of today's energy use patterns; what's ahead? Recent (1995 to 2002) annual average growth rates in primary energy use in buildings range from around –0.3% in Eastern Europe and the former Soviet Union countries to over 6% in the commercial sector of the developing Pacific Asian nations. On average, energy use in buildings is growing by about 2% per year worldwide, and the rate of growth has increased since 1995. Such continued growth in energy use in buildings is likely to contribute to overstressing many already stressed economies and environments around the world.

Energy growth rates will vary among nations according to structural differences in their economies (demographics, industrial composition, economic growth) and differences in the energy services that each energy consumer chooses or desires to purchase. In the building sector, these differences in preferred energy services are affected by varying climates, construction methods, and cultural habits. Each country can accommodate its natural growth in the demand for energy services by some combination of supplying more energy and improving the efficiency of energy consumption. In all sectors, improving energy efficiency before increasing energy supply is generally the more economically efficient national strategy. A portfolio of energy policies is available to governments for this purpose, including strategic energy pricing, financing and incentive programs, regulatory programs, government purchasing directives, and consumer education.

Improving energy efficiency in the residential- and commercial-buildings sectors not only saves money and reduces pollution but also improves the indoor environment of homes and the productivity in commercial buildings. Energy-efficiency labels and standards for appliances, equipment, and lighting offer a huge opportunity to improve energy efficiency and are especially effective as an energy policy. Government labeling and standards-setting programs can affect most of the energy that will be used in buildings just two decades from now. As Figure 1-1 below indicates, most of the energy-consuming products that will account for building energy use 20 years from now have not yet been built.

Well-designed mandatory energy-efficiency standards transform markets by removing inefficient products, with the intent of increasing the overall economic welfare of most consumers without seriously limiting their choice of products. Energy labels empower consumers to make informed choices about the products they buy and to manage their energy bills. Perhaps the most dramatic example in the world of the effectiveness of energy-efficiency standards and labels is the transformation of the refrigerator market in the U.S. The average new refrigerator sold in the U.S. today uses, per year, only a quarter of the electricity that would have been used by a refrigerator sold 30 years ago when standards and labels were first introduced, despite the new product's increased size and added features. Such improvements in energy efficiency not only improve a nation's economic efficiency and foreign trade, they also enhance people's lives by lowering consumers' energy bills and making energy services more affordable, enhancing labor markets, and improving public and environmental health. Labels and standards are appropriate for most cultures and marketplaces; therefore, the authors believe that energy-efficiency labels and standards deserve to be the cornerstone of any country's balanced portfolio of energy policies and programs. Often, benefits similar to those from mandatory standards can be achieved by voluntary labels and other voluntary energy-efficiency programs, and opinions sometimes differ on which type of program should be considered first. The specific extent to which labels and standards should be applied and the balance of programs that will most effectively limit energy growth and at the same time stimulate economic growth will depend on individual national circumstances and other considerations discussed in the S&L guidebook that is available for download from this website.