Improving Energy Performance in Canada – Report to Parliament Under the Energy Efficiency Act For the Fiscal Year 2006-2007

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Chapter 2: Equipment, Standards and Labelling

INTRODUCTION

Natural Resources Canada's (NRCan's) wide range of energy efficiency initiatives includes standards, labelling programs and Canada's Energy Efficiency Regulations (the Regulations).

The Energy Efficiency Act (the Act) of 1992 gives the Government of Canada the authority to make and enforce regulations on performance and labelling requirements for energy-using products that are imported into Canada or shipped across provincial borders for the purpose of sale or lease.

The Energy Efficiency Regulations came into effect in February 1995, after extensive consultations with provincial governments, affected industries, utilities, environmental groups and others. The Regulations refer to national consensus performance standards developed by accredited standards writing organizations such as the Canadian Standards Association (CSA). Such standards include testing procedures that must be used to determine a product's energy performance. Regulated products that fail to meet the minimum performance levels identified in the Regulations cannot be imported into Canada or traded interprovincially.

NRCan works with stakeholders to improve standards development and approval processes and to accelerate the market penetration of high-efficiency residential, commercial and industrial equipment.

Regulations have now been established for more than 30 products that consume 71 percent of the energy used in the residential sector in Canada and 50 percent of the energy used in the commercial/institutional sector. Regulated products include major household appliances, water heaters, heating and air-conditioning equipment, automatic icemakers, dehumidifiers, dry-type transformers, electric motors of 1 to 200 horsepower and certain lighting products. The Regulations apply to these products even if they are incorporated into a larger unit or machine that is not regulated.

NRCan regularly amends the Regulations to strengthen the minimum energy performance requirements for prescribed products in situations where the market has been transformed to a higher level of efficiency. The Regulations are also amended to add new products, harmonize minimum energy performance requirements with those of other jurisdictions, and update testing methodologies or labelling requirements. Also, regulations can be established for gathering market data on the energy performance of certain types of equipment. For example, the data gathered for gas fireplaces is used to support programs developed by the industry and NRCan and its partners for gas fireplace performance.

Before amending the Regulations, NRCan conducts studies to analyse how the proposed change will affect the market. For example, NRCan checks if it will have a measurable impact on energy efficiency levels without imposing undue hardship on manufacturers. A key criterion for amending the Regulations is that the change must have a significant positive impact on consumers and the environment. Stakeholders are consulted on all proposed changes to the Act and Regulations, as well as on their practical application in the market.

The Act and the Regulations support labelling initiatives designed to help consumers and commercial/industrial procurement officials identify and purchase energy-efficient equipment that will save them money and reduce greenhouse gas (GHG) emissions over the life of the product.

For example, the Act and the Regulations require that an EnerGuide label be displayed on major electrical household appliances and room air conditioners. For appliances, the EnerGuide label shows the estimated annual energy consumption of the product in kilowatt hours and compares it with the most and least efficient models of the same class and size. The EnerGuide label for room air conditioners indicates the model's energy efficiency ratio and provides a comparative bar scale.

The EnerGuide label is also used voluntarily by manufacturers and suppliers of residential oil and gas furnaces, vented gas fireplaces, central air conditioners and air-to-air heat pumps. In this case, the EnerGuide rating for a specific product (annual fuel utilization efficiency rating for oil and gas furnaces, fireplace efficiency rating for gas fireplaces and seasonal energy efficiency ratio for central air conditioners) is published on the back page of the manufacturer's brochure. The rating information includes a bar scale that compares the model with others of the same size and capacity.

The EnerGuide for Industry Program used the EnerGuide name on labels to encourage the use of off-the-shelf industrial equipment that is more energy efficient, including equipment prescribed under the Regulations. This equipment includes electric motors; dry-type transformers; heating, cooling and ventilation equipment; and certain lighting products. EnerGuide for Industry offered up-to-date product databases, Web-based applications and energy-use information. Equipment buyers are able to use this information to compare the energy performance of products and select the most energy-efficient model that meets their needs.

As well, the Regulations are consistent with, and build on, the ENERGY STAR^® Initiative in Canada. The internationally recognized ENERGY STAR symbol is a simple way for consumers to identify products that are among the most energy efficient on the market. Products that are prescribed in the Regulations and are also part of the initiative must meet levels of energy efficiency starting at 10 percent more above the minimum performance levels set out in the Regulations to qualify for the ENERGY STAR symbol. As higher-performance products penetrate the market, their efficiencies become candidates for new standard levels.

STANDARDS

As a world leader in the use of energy efficiency standards, NRCan is committed to harmonizing federal standards and labelling requirements with those developed in other jurisdictions. Harmonization reduces barriers to trade and sustainable development by improving the flow of energy-efficient products within Canada and around the world. This practice minimizes the regulatory burden on manufacturers and avoids confusion for consumers.

For example, the performance requirements in the Regulations are similar to those in several Canadian provinces that regulate energy-using equipment that is manufactured and sold within their borders. Although NRCan works closely with provinces to harmonize standards, some provincial regulations can differ from the federal requirements or can apply to other types of energy-using equipment.

Due to the highly integrated North American market, Canada's energy performance requirements for many products are similar to those regulated in the United States (U.S.). As well, Canada's EnerGuide labelling requirements are coordinated with the EnerGuide labelling program in the U.S.

Harmonization work is also undertaken through the North American Energy Working Group established by Canada, the U.S. and Mexico.

The Asia-Pacific Economic Cooperation (APEC) organization is another important forum for regional cooperation on harmonization issues. Trade and investment liberalization and facilitation are high on the agenda of the APEC Energy Working Group (EWG). One EWG initiative is to harmonize energy efficiency test methods and conformity assessment regimes of Asia-Pacific economies that use energy efficiency standards and labels as part of their environmental or energy programs.

NRCan supports Canadian representation on committees of the International Organization for Standardization and the International Electrotechnical Commission as well as supporting the national and international policy work of the Standards Council of Canada.

COMPLIANCE AND ENFORCEMENT

The Regulations outline a number of responsibilities for dealers who import to Canada, or ship from one Canadian province to another, any prescribed energy-using product. NRCan is committed to securing voluntary compliance but can use enforcement measures when necessary.

NRCan emphasizes self-monitoring, reporting, voluntary compliance and collaboration. However, the Act prescribes specific enforcement measures when dealers violate the law. Enforcement activities include preventing the importation of non-compliant products to Canada; preventing the sale or lease of non-compliant products in Canada; and fines. Violators can also be fined under the Administrative Monetary Penalty System of the Canada Border Services Agency for not providing required information on the prescribed product at the time of import; serious violations can be prosecuted.

To monitor compliance with the Regulations, NRCan captures information from energy efficiency reports and import documents. Section 5 of the Act requires that dealers provide energy efficiency reports when they market a new product model. The required information includes the energy performance of each model, the name of the testing agency and the size category, as described in Schedule IV of the Regulations.

The Regulations require that, when importing a regulated product into Canada, dealers provide specific product information on customs documents for all shipments (type of product, brand name, model number, name and address of dealer and purpose of import). Customs documents contain much less information than an energy efficiency report, but there is enough to allow NRCan to verify that there is a matching energy efficiency report. NRCan can then verify that all products entering Canada meet the required energy performance levels and can take action when necessary.

Key 2006-2007 Achievements

• NRCan processed over 631 559 records relating to the importation of regulated energy-using products to Canada in 2006-2007. The records were from April 1, 2006, to March 31, 2007. Figure 2-1 illustrates the volume of import documents received in paper form and electronically each month.
• More than 773 621 new or revised model numbers were submitted to NRCan. The records were from April 1, 2006, to March 31, 2007, in energy efficiency reports received from dealers.

REGULATORY IMPACT TO DATE FROM THE REGULATORY IMPACT ANALYSIS STATEMENT

In preparing amendments to the Regulations, NRCan analyses the impact of the proposed amendment on society, the economy and the environment. This information is made available through the Regulatory Impact Analysis Statement, which is annexed to the Regulations and published in the Canada Gazette, Part II.

It is estimated that Canada's energy performance standards will cause a reduction of 25.6 megatonnes in aggregate annuel emissions by 2010 (see Table 2-1). This reduction is equivalent to taking 4 million cars off the road.

TABLE 2-1

Estimated Impact of Energy Efficiency Regulations, 2010 and 2020 (aggregate annual savings)

Product (amendment number in brackets)	Energy savings (petajoules)		CO2 reductions (megatonnes)
	2010	2020	2010	2020
Residential appliances	117.20	133.84	13.26	15.60
Lamps – fluorescent/incandescent	11.60	13.40	7.55	9.80
Motors	16.30	17.70	2.03	2.14
Commercial HVAC	6.40	7.50	0.43	0.57
Refrigerators (5)	4.92	10.96	0.49*	1.10*
Ballast/room A/C, PAR lamps (6)	3.96	9.44	0.39*	0.94*
Clothes washers, domestic hot water, exit signs, chillers (8)	16.20	42.67	1.29	3.61
A/C, commercial refrigeration (9)	1.64	5.51	0.16	0.55
Total	178.22	241.02	25.60	34.31

* Values different from the Regulatory Impact Analysis Statement because of the change in the emission factor (using 99.3).

LABELLING AND PROMOTION

Since 1978, the EnerGuide label (see Figure 2-2) has given Canadians an opportunity to compare the energy consumption of appliances. In 1995, with the introduction of the Regulations, placing an EnerGuide label on major electrical household appliances and room air conditioners became mandatory. The label on a product shows how much energy a product uses, allowing the customer to consider the most energy-efficient choice.

A voluntary EnerGuide rating program was established in 1997 and included gas furnaces, central air conditioners, heat pumps and oil furnaces. In the fall of 2003, gas fireplaces were added to the EnerGuide rating program. Manufacturers were asked to integrate EnerGuide ratings for fireplace efficiency in their brochures. These changes were coincident with the requirement in the Regulations to test, verify and report on fireplace efficiency.

Because these products are typically purchased from a product brochure or catalogue, prescribing a label on the product is not useful. Manufacturers are encouraged to include an EnerGuide rating in product brochures or catalogues, so consumers can compare the efficiency of the product when they are in the buying process. Major distributors of such products for sale in Canada report the verified energy performance rating of their products, as tested to the standards in the Regulations. The verified energy performance rating corresponds to the EnerGuide rating published in the brochures or catalogue. To date, manufacturers representing 85 percent of the products in the market participate in the EnerGuide rating program and publish the ratings in their brochures. In addition, participants in the EnerGuide rating program must provide shipment data and aggregate energy efficiency information to track the progress of the program and identify marketplace improvements that can result from labelling.

EnerGuide directories that list energy ratings for major appliances and room air conditioners are published annually. They are distributed to consumers, retailers and appliance salespeople. In fulfilling requests for information, electric utilities and provincial governments also distribute the directories. On-line directories for all appliances and heating and cooling equipment are published on the Web site of the Office of Energy Efficiency (OEE) and updated monthly.

Regularly conducted polls indicate that more than 50 percent of Canadians surveyed are aware of the EnerGuide label.

In 2001, responding to public interest in a labelling system that identifies the best performers, Canada officially introduced ENERGY STAR, the international symbol for energy efficiency (see Figure 2-3). Canada signed an agreement with the U.S. Environmental Protection Agency and the U.S. Department of Energy. The OEE is the custodian of the program for Canada. Canada was the fifth country to join the ENERGY STAR program, along with Australia, New Zealand, Japan and Taiwan. The European Union adopted ENERGY STAR for office equipment.

ENERGY STAR establishes high efficiency criteria and levels for selected products for the residential and commercial sectors. Product categories are selected for the technical potential for high efficiency. This is a voluntary program. However, organizations must demonstrate that products meet the admission criteria and performance levels. For appliances and heating and cooling products, the criteria are based on the same test standards as those applied under the Regulations. Canada promotes specific product categories for which levels and criteria can be harmonized with those of the U.S., including the following:

• major appliances
• heating, cooling and ventilation
• consumer electronics
• office equipment
• windows and doors (Canadian levels)
• selected lighting products (currently not fixtures)
• selected commercial equipment

Canada has also integrated ENERGY STAR with the EnerGuide label for major appliances and room air conditioners to help consumers identify the best-performing products. While the EnerGuide label shows how much energy a product uses under normal conditions in one year, the ENERGY STAR symbol on the label identifies the most energy-efficient product. Now that industry-accepted standards of high efficiency have been established, ENERGY STAR has become the criterion to meet for incentive and rebate programs.

Pilot projects were implemented in partnership with seven Canadian gas utilities and a non-government organization to address three major barriers to higher efficiency: awareness, accessibility to high-efficiency products and acceptance.

With NRCan's involvement, several utilities doubled the number of incentives and/or loans that they would have disbursed without government participation or under their previous programs. The organizations also coordinated the delivery of coupons from manufacturers to complement the incentives. Canada's participation in this initiative also helped to increase the market penetration of high efficiency gas-fired furnaces and boilers and to include higher efficiency products from markets that supported mid-standard-efficiency products in the past.

ENERGY STAR was also used as the basis for sales tax rebates in British Columbia for heating and cooling equipment, and in Saskatchewan for the purchase of furnaces, boilers and qualifying appliances (refrigerators, dishwashers, clothes washers and freezers). Organizations across Canada have used ENERGY STAR as a campaign driver to promote replacement with, or purchase of, higher-efficiency products.

Continuous promotion of ENERGY STAR qualified appliances has paid off. Industry statistics for 2005 show an increase in market penetration from almost nil in 2000 to 38 percent for refrigerators and 91 percent for dishwashers (see Figure 2-4). The increase in market penetration indicates growing acceptance of ENERGY STAR as the brand for high efficiency and the willingness of manufacturers to raise their products to qualifying levels. ENERGY STAR specifications and levels are periodically updated as product saturation is reached to encourage industry to strive for more efficient products and thus maintain the relevance and credibility of the brand.

ENERGY STAR is also well known in the commercial sector, with criteria for products ranging from office equipment to traffic signals. NRCan supports demonstration projects to validate the savings and other benefits of some of these products and to address barriers to their widespread acceptance.

One example is NRCan's support for the accelerated replacement and promotion of light-emitting diode (LED) exit signs for retrofit applications in Alberta. Exit signs operate around the clock; and for high-rise buildings, with a minimum of four signs per floor at approximately 25 watts (W) for each sign, these products represent a constant electrical draw and, therefore, an energy savings opportunity for building owners.

The project objectives were to

• target apartment building owners
• stimulate demand for LED exit signs
• increase awareness of the benefits of early replacement of standard incandescent exit signs with more efficient LED units that consume 5 W

The project also included recycling the replaced units. The program influenced the conversion of 7311 incandescent exit signs with LED exit signs. This change will save approximately 1.6 gigawatt hours of electricity and 570 tonnes of carbon dioxide annually. For all new installations, the Regulations require that exit signs meet the ENERGY STAR level of 5 W per face.

Canada continues to promote ENERGY STAR guidelines to procurement officials. It has updated an interactive cost calculator that compares energy cost savings and GHG emissions reductions that are associated with the purchase of ENERGY STAR qualified products. Workshops were held across Canada to make governments, institutions and municipal officials aware of the ENERGY STAR criteria and procurement tools. Canada is also working with housing agencies to help them identify energy savings in their properties and to specify ENERGY STAR qualified products for replacement equipment.

Canada continues to expand the types of products included in its ENERGY STAR agreement. For example, Canada recently included vending machines, commercial refrigeration, compact fluorescent lamps and commercial clothes washers in its correspondence with the U.S. government.

NRCan developed a rating and labelling system for efficient refrigeration applications in ice and curling rinks, under the name CoolSolution.* CoolSolution designates innovative technologies and practices and consists of three main elements:

• heat recovery from the refrigeration system to meet all the building heating requirements (e.g. hot air, hot water) or to export this energy for other purposes
• adaptation to the Canadian climate by taking benefit of the naturally occurring cold temperatures. This is done by varying the temperature of the heat that is released into the environment according to the outdoor temperature.
• reduction of the synthetic refrigerant charges of the refrigeration system, which have a serious adverse impact on climate change. This is done by confining the synthetic refrigerant to the mechanical room and using environmentally friendly fluids to remove and distribute heat.

An ice rink application is qualified "CoolSolution" if it has a score higher than 50 percent. An incentive program to encourage the adoption of CoolSolution and reduce the initial payback of the first implementations started in November 2006. Partnerships to accelerate the program have been successful. (See Chapter 4: Buildings.)

Key 2006-2007 Achievements

• Held three workshops with public sector procurement officials.
• Participated in federal-level greening government committees and department-level sustainable development committees to include ENERGY STAR.
• Worked with the Ontario Power Authority and Social Housing Services Corporation on procurement of ENERGY STAR equipment and incentives.
• Provided cost-shared incentives for selected ENERGY STAR qualified heating equipment through various stakeholder organizations (gas utilities, the Ontario Power Authority).
• Established a framework for a strategic lighting initiative.
• Established high performance criteria for decorative lighting for ENERGY STAR in Canada (an international first).
• Maintained 28 CSA energy performance subcommittees, published four CSA standards and completed nine technology and market studies.

* CoolSolution is an official mark of Her Majesty the Queen in the Right of Canada as represented by the Minister of Natural Resources.

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