Can Negotiated Agreements Replace Efficiency Standards as an Instrument for Transforming the Electrical Appliance Market?

Without reinforced energy saving policies, residential consumption of electricity will increase sharply over the next twenty years, in particular as a result of expected growth in the specific uses of electricity. The main problem is not a lack of energy efficient technologies, which do indeed exist for electrical appliances, but one of slow diffusion of existing technologies due to the weakness of the price signal and the purchasing behaviour of consumers. In association with energy labelling, minimum efficiency performance standards have proved to be very effective in stimulating technological progress and organising market transformation. But standards also suffer from long and often difficult implementation periods because of the resistance of the industrial sector. For manufacturers, similar results could be obtained more easily and more rapidly with voluntary agreements because they introduce flexibility margins in the achievement of commitments. This paper analyses the specific advantages of voluntary agreements for improving energy efficiency in the domestic appliances sector. We conclude that voluntary agreements may be an effective instrument for market transformation in certain conditions, but the alternative of regulatory measures must remain a credible, realistic threat if voluntary agreements are to have a really significant impact on performance improvement.