Ecodesign – European Commission land grab or market facilitator?

The Third Generation Environmentalism Ltd, E3G, the independent, non-profit organisation accelerating the global transition to sustainable development, provides a new briefing report on Ecodesign in the form of a question and answer entitled Ecodesign – European Commission land grab or market facilitator? It is a valuable briefing note because it reviews what Ecodesign is and what it is doing. Too often we forget.

Let’s look at a couple of excerpts:

Do market players really support Ecodesign?

There has been some recent confusion over whether industry really does support Ecodesign. In fact industry is very supportive of this policy because of its pro-innovation and pro-market focus; similarly, consumer groups and environmental groups, who are also involved in Ecodesign negotiations, support it because it saves consumers money and reduces environmental impacts.

What next for Ecodesign?

Ecodesign is a very good example of effective energy efficiency policy making. It is effective because it addresses two of the most persistent market failures around efficiency: split incentives (the person making the product does not pay the energy bill and so without regulation has little incentive to design efficiency into the product) and information asymmetry (where a lack of information about energy use leaves consumers uninformed over which products will help them reduce their energy use). Great pains are taken to ensure the decision-making process has credibility among all stakeholders and as such support for this policy is spread across stakeholders including industry, consumer organisations and environmental NGOs. Most Member States are also supportive as it both facilitates the single market and relieves Governments from the requirement to address these issues at a national level.

It is hoped the next phase of Ecodesign will happen during 2015-2017. This will include setting the priorities for developing new product standards. The European Commission has commissioned a study to look at potential options: candidates include TVs, kettles, solar panels, and lifts. Smart phones are also on the list but in informal discussion the Commission has stated it is unlikely to regulate since there are strong market drivers (focused on the consumer desire for long battery life) for efficiency improvements.

With concerns about rising energy prices and the slow progress to meeting to the EU’s 20% 2020 energy efficiency target high on the agenda, it will be a significant blow both for industry and consumers if the next round of Ecodesign interventions are not taken forward because of an ill-informed populist backlash.

Remember that Ecodesign is one of the most powerful energy efficiency instruments that the European Commission has. While there are Directives to be implemented by member states, it is Ecodesign that sets minimum energy performance standard for technologies that have to be followed by industry and member states. That is an incredibly powerful tool.

How do you see Ecodesign?

The E3G briefing note is available here.