Compendium on Energy Conservation Legislation
in Countries of the Asia and Pacific Region

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Part One: Overview of Energy Conservation Legislation in the Asia and Pacific Region

3 Conclusions and recommendations on regulatory frameworks for energy conservation and
promotion of energy efficiency

SECTIONS IN THIS CHAPTER

General aspects of energy efficiency promotion
Energy pricing
Energy management in industries
Energy standards for construction
Promotion of fuel efficiency in road transport
Energy performance standards and energy labelling for appliances
Technical recommendations on legislation

The promotion of sustainable energy development and energy use is likely to become an increasingly important policy issue as policy and lawmakers from industrialized and developing countries address and incorporate environmental concerns into their decision making.

Part Five of this publication includes the texts of the first two international protocols which relate to energy efficiency promotion: a) the Energy Charter Protocol on Energy Efficiency and Related Environmental Impacts; and b) the Kyoto Protocol to United Nations Framework Convention on Climate Change. Under the provisions, and in the spirit of these protocols, countries with developing economies or economies in transition which have already become or may become signatories to the protocols, commit themselves in qualitative terms to an active promotion of sustainable energy use. Against this background, the establishment, review or improvement of regulatory frameworks for energy efficiency promotion may be considered in a growing number of countries.

In this regard, the Secretariat would like to share some conclusions and recommendations which were first formulated by invited experts and resource persons at the Ad Hoc Meeting of Co-Authors on Compendium for Energy Conservation Legislation in Countries of the ESCAP Region. The meeting was jointly organized by the ESCAP Secretariat and the Government of Viet Nam's Ministry of Science, Technology and Environment (MOSTE) and held in Hanoi, 12-13 March 1998. The conclusions were further reviewed by the Secretariat and are presented here below.

3.1 General aspects of energy efficiency promotion

a) The enactment of a regulatory framework for promotion of energy conservation and energy efficiency can be useful for Asian countries, particularly for countries with rapidly growing domestic energy demand or energy import dependent economies.

b) Promotion of energy conservation and efficiency should form an integral part of national energy policy.

c) Basic energy conservation laws should codify energy conservation policies and create the principal legal foundation for government intervention aimed at lowering the energy intensity of economic activity.

d) Energy conservation legislation should ideally result from a participatory decision making process which adequately involves all stake holders.

e) The government should provide the framework legislation from which business opportunities arise. This collaboration between the Government and the community should lead to energy efficiency and the creation of jobs necessary for development.

f) Fiscal and non-monetary incentives should be the preferred tools in achieving the desired conservation and efficiency. Regulatory mechanisms should be in the form of prescriptive-based or performance-based legislation that can be revised and upgraded.

g) Energy conservation legislation should cover both supply of and demand for commercial and traditional forms of energy. <return to top>

3.2 Energy pricing

a) The feasibility of all energy efficiency promotion activities is largely predetermined by energy pricing and related policies. If possible, energy price subsidies should be reduced. Energy prices should be gradually adjusted to reflect the long-term marginal costs of energy supply.

b) The comparative inelasticity of energy demand makes taxation of all forms of energy an effective tool of fiscal policy which should serve to support energy conservation or energy efficiency objectives.

c) Energy pricing mechanisms should seek to internalize external costs including costs of emissions reduction and preservation or rehabilitation of the environment.

3.3 Energy management in industries

a) The strengthening of internal energy management should be the first goal of energy conservation promotion in industry.

b) Energy conservation laws may require selected industries to keep records on energy consumption and/or report pertinent data to authorities. Regulatory bodies may prescribe a standard format for energy reporting. Confidentiality of business data should be respected.

c) Manufacturing enterprises may be encouraged to undertake external audits or quality control assessments on a voluntary basis (ISO or QCC certification).

d) Establishment of regular national training programmes for energy managers is an essential precondition to effective energy conservation programmes.

e) Training of energy managers and certification of energy manager qualifications should precede or accompany any regulatory measure.

f) Advisory services on energy conservation should be offered. If possible, financial incentives may be extended to offset a part of the external audit costs. Energy services companies (ESCOs) may be encouraged to incorporate energy conservation consulting services in their regular activities.

g) Registration and licensing of energy audit firms must be a transparent and objective process.

h) Energy conservation laws may encourage the use of co-generation. <return to top>

3.4 Energy standards for construction

a) Energy standards for construction will most practically be applied to new buildings in the first instance, offering an easily achievable low-cost option for energy efficiency.

b) The proposed building design should be analyzed for its energy efficiency at the same time as the building application is made. The issue of a building permit and the final sign-off should be linked to the proposed design assessment and the post-construction energy audit fulfilling the energy efficiency requirements.

c) Introduction of energy standards for buildings should be preceded by a preparatory phase during which the proposed national standards are tested and design professionals, developers and building energy managers are trained in the application of the available tools.

d) National energy conservation laws should include a section describing the principal aspects of energy conservation policies based on the total energy performance of buildings. Detailed regulations explaining the various building codes and their implementation may be issued separately to allow greater flexibility and periodic adjustments of the regulations.

e) The authority in charge of establishing and monitoring standards for buildings should be clearly identified in the law.

f) Through the use of fiscal incentives, governments may encourage the domestic manufacture or local fabrication of appropriate building materials, systems, and components to improve the energy efficiency of buildings.

g) The recommendations contained in paragraphs d) through g) of section 3.3 regarding energy management in industries also apply to the building sector.

3.5 Promotion of fuel efficiency in road transport

a) Energy conservation laws may prescribe systems of fuel economy standards and labelling.

b) Energy conservation laws may provide that all advertising in relation to the sale of model-specific new motor vehicles make specific reference to the fuel consumption for the model.

c) Fuel economy may be facilitated by regulatory measures designed to increase the use of public transport and vehicle occupancy.

d) Energy conservation laws may, by the use of taxation and fiscal incentives, promote fuel efficiency in road transport, development of new transport fuels and electric and hybrid motor vehicles. <return to top>

3.6 Energy performance standards and energy labelling for appliances

a) Energy performance standards and energy labels may be effective regulatory tools for lowering energy intensities and improving efficiency in energy consumption.

b) Energy conservation laws may prescribe or enable authorities to launch and implement energy performance standards and energy labelling for energy-consuming products.

c) Energy conservation laws may require energy labels to provide consumer information on the product's expected energy performance.

d) Energy performance standards and energy labelling programmes should be designed to fit the local manufacturing sector, market, economy, and socio-cultural context of each country.

e) The design of energy performance standards and energy labelling programmes should include a mechanism which regularly and periodically upgrades performance standards and recalibrates energy labels.

f) In initiating and enhancing appliance energy standards and labelling programmes, manufacturer participation should be solicited.

g) Although labelling programmes may have positive impacts on consumer purchasing decisions, only few empirical evaluations have been undertaken or published thus far. Research evaluating the impacts of labelling programmes on consumer purchasing decisions is recommended.

h) Consumer understanding of the linkage between environment and energy may be an important determinant of energy labelling programme success. Consumer awareness campaigns and environmental education should be pursued to support labelling regulation or programs.

i) Labels should be designed with input from consumer marketing experts and consumer organizations in order to make labels user-friendly. <return to top>

3.7 Technical recommendations on legislation

a) Basic energy conservation legislation should stipulate the fundamental energy conservation and efficiency principles, particularly those which are expected to remain unchanged for a long time.

b) Supplementary detailed provisions on the implementation of energy conservation measures may be established through regulations or ministerial orders, which may be amended more easily.

c) Energy conservation legislation and regulations should be continually reviewed by the appropriate government ministry or agency in order to ensure that they continue to accurately represent government policy.

d) In order to ensure the maximum efficacy and co-ordination of energy efficiency legislation, all such legislation should be under the control and supervision of the same government ministry or authority.

e) All energy conservation legislation should contain enforcement mechanisms. A government agency should be given the responsibility for effective enforcement of the existing laws. Realistic targets should be set and realistic penalties for non-compliance should be prescribed.

f) Ideally, all energy conservation laws should be included in one enactment, although the addition of energy conservation provisions in legislation concerning the various sectors of the economy is also possible.

g) Legislation should be drafted in such a manner as to ensure that binding and enforceable legal rights and duties are created. In order to achieve this, attention must be paid to the exact wording of the legislation, particularly to the technical definitions that will be applied to all energy-using equipment, appliances and materials.

h) In countries with federal jurisdictions where the legislative power regarding energy conservation legislation vests in the various states, the federal government should endeavour to ensure that the legislation is uniform between the states. <return to top>

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