The importance and the need for technical standards and codes have been well recognised by the technical community all over the world. If standards and codes are absent, transaction costs can increase as each buyer must ascertain the quality and functionality of potential technologies individually. Technology risks can increase because of the uncertain quality of technologies. Equipment purchasers or building architects may not be the ones paying the energy bills or using the equipment, so the interests of end-users (i.e., for cost-effective levels of efficiency) are absent from purchasing or construction decisions. Non existent or inconsistent standards reduce confidence in the market for environmental technologies and deter investment. More, clear and harmonised standards, regulations and guidelines, enforced at regional and local levels, help alleviate this barrier.
Because equipment and supplies may come from a number of countries, most countries
have some type of institution that looks after matters relating to standards.
These official government agencies are invariably assisted by a number of industry
working groups, NGOs, and research institutions in the business of standard
setting. Although in some cases standards are voluntary (with the exception
of safety related standards), many countries have realised the importance of
making these standards mandatory with some form of penalties for noncompliance.
Intermediary organisations such as the International Standards Organisation
may have a role. It is an NGO federation of 130 national standards bodies through
which capacity building is undertaken. International standardisation can be
facilitated through this process. So far there are 12,000 international standards
published which have been devised through Technical Committees using a consensus
approach. The Environmental Management Standards 14000 series could be further
applied to climate change issues. An important issue-and often the weakest link
in policy -- is the enforcement of the standards and the availability of testing
and technical institutions to provide the necessary technical assistance for
standards setting and enforcement. Codes and standards are important because
equipment purchasers or building architects may not be the ones paying the energy
bills or using the equipment, so codes and standards provide a means for representing
the interests (i.e., to cost-effective levels of efficiency) of end-users who
are absent from purchasing or construction decisions. Standards also provide
another way to overcome information barriers, as they allow consumers to be
less knowledgeable about the equipment they are purchasing. Standards can also
create a market (i.e., for high-efficiency equipment) where none existed (i.e.,
perhaps buyers existed but suppliers did not). Eco-labels have been in place
in a number of countries for energy-efficient and other environmentally sound
products; the case of eco-labels in India is described in Box
|Box 4.4 Eco Labelling in India|
| Eco-labels have been used in India since 1991. They are given to products
that have met specific environmental criteria related to the production
process used, wastes arising from production, and resources consumed in
production and use. A National Steering Committee and a Technical Advisory
Committee have been formed to provide policy and technical guidance. So
far 20 products have received labels, including toilet soaps, detergents,
paper, and edible oils and coffee. Despite efforts by the Ministry of Environment
and Forests, which is responsible for eco-labelling, only two companies
have completed the requirements for getting an eco-label. Yet these companies
have not used the eco-label in their consumer communications because they
do not think that consumers are aware of the meaning and advantages of the
labels and because the labels do not provide any direct financial incentive
such as tax exemptions.
In contrast to eco-labels, energy-efficiency labels have yet to be have an effect in India. Efficiency labels are more informative but also require a higher level of education to understand. On the other hand, there is a way to calculate the economic benefits of a product with an efficiency label, while this is not so easy for eco-labelled products. There is a need for research on the environmental benefits of eco-labelled products that might lead to a clearer understanding of financial benefits. There is also a need for greater consumer education and awareness about eco-labels and energy-efficiency labels.
A number of countries have adopted laws requiring all manufacturers to follow energy efficiency standards. The European Union, for instance, has adopted a series of energy efficiency standards (see EU Directives: Directive 96/60/EC; Directive 97/17/EC; Directive 98/11/EC). Efficiency standards for commercial buildings are in place in countries such as Sweden, Germany, France and the UK, and also in some of the developing countries such as Pakistan and India.
In the United States and Europe, mandatory energy efficiency standards for appliances and buildings have produced significant energy savings (see Case Studies). In most of these countries, building standards are adopted at the state level or even at the town/city level and this is where implementation and enforcement occurs. In a number of countries, building codes do exist but they are only to act as a guideline for builders. In practice, substantial deviations do take place depending on the customer's requirement. In a significant move, reflecting globalisation of marketing, the EU (October 1999) agreed to adopt the US Energy Star programme for office equipment (see Box 4.5).
|Box 4.5 EU Adoption of the US Energy Star Programme (Source: EC 1999. Community Preparatory Acts: Document 599PC0328)|
A voluntary labelling programme for office equipment has been identified as the most cost-effective action to achieve the potential energy savings; and a study proved that there is added value in an international co-ordination of labelling programmes to achieve the potential, as well as to ensure fair comparability between products of the same type. To facilitate international trade and to reduce the regulatory burden on the operators whilst maximising the energy savings, the European Commission decided that the best way of reducing the energy consumption of office equipment was to introduce the Energy Star Programme in the European Community. This would: 1) build upon the advantage of an already well-recognised logo in the Community market, 2) maximise manufacturers' participation and their active involvement in promoting energy savings; and 3) use a well-recognised logo to educate users about energy savings. Furthermore, this would result in a clear advantage for Community economic operators. The Energy Star logo was the "de facto" required standard for office equipment sold on the US market. In addition, the Energy Star requirements were becoming standard worldwide (in the Community as well), and this without any European input.
Renewable energy technology standards and certification have played important roles in building markets for dispersed, small-scale technologies where technologies are diverse, vendors are many, and consumers face high risks in evaluating and selecting technologies and suppliers. For example, in India, government performance standards for rural electrification have had a dramatic impact not only on technical system operation but also on the development of service/maintenance infrastructure (see Chapter 16, Case 14). In Inner Mongolia, technical standards for wind turbines have facilitated a market there (see Chapter 16, Case 3).
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