Current Developments in Domestic Climate Mitigation Measures

1. Current Developments in Domestic Climate Mitigation Measures Carbon footprinting and energy efficiency labelling schemes and relevant WTO rules and activities Ludivine Tamiotti, Counsellor Trade and Environment Division, WTO ludivine.tamiotti@wto.org

2. Outline of presentation Relevant Activities of the WTO Relevant WTO rules Carbon footprinting and energy efficiency discussions in the WTO

3. Relevant Activities of the WTO

5. WTO/UNEP Report on Trade and Climate Change Key objectives Key policy instruments Carbon tax, emissions trading schemes Internalize environmental costs Economic incentives Financial mechanisms: R&D, fiscal, price and investment measures Promote development & deployment of climate-friendly technologies Emissions and energy performance standards and labelling Improve energy efficiency and reduce GHG emissions Regulatory instrument

6. WTO/UNEP Report on Trade and Climate Change Key objectives Key policy instruments Key WTO Agreement Carbon tax, emissions trading schemes Internalize environmental costs GATT Financial Mechanisms: R&D, fiscal, price and investment measures Promote development & deployment of climate-friendly technologies SCM Agreement Emissions standards, labelling on energy performance Improve energy efficiency and reduce GHG emissions TBT Agreement

7. WTO Specialized Committees A negotiating forum The core functions of the WTO may have a place in the trade and climate change debate: Specialized committees The administration of a set of rules

8. WTO Specialized Committees Committee on Trade and Environment (CTE) 2 WTO Committees are directly relevant to issues related to Carbon footprinting and energy efficiency Committee on Technical Barriers to Trade (TBT Committee)

9. WTO Specialized Committees General discussions of the environmental benefits of removing restrictions in the energy sector, the forestry sector, the effect of energy efficiency labelling on market access Committee on Trade and Environment (CTE) Specialized discussions on Carbon Footprinting in 2010: exchange of national experiences, briefings by international institutions

10. WTO Specialized Committees In recent years the TBT Committee discussed a number of product standards and labelling requirements targeted to energy efficiency or emission control Committee Technical Barriers to Trade (CTBT) Fuel economy standards for cars Eco-design requirements for energy-using products Examples of regulations discussed so far include: Energy efficiency programmes for consumer products Emission limit values for diesel engines

11. Relevant WTO Rules

12. Philosophy of the TBT Agreement Right to Take Regulatory Measures Avoid Unnecessary Obstacles to Trade

13. Key principles Agreement on Technical Barriers to Trade / GATT Non discrimination Key principles include Avoidance of unnecessary trade barrier Harmonization

14. Of national origin From any other country National Treatment Most-Favoured Nation (MFN) Non-Discrimination Treatment no Less Favourable to Like Products Originating

15. Philosophy of the TBT Agreement Stated Preference for International Standards International Conformity Assessment Procedures

16. National security requirements Protection of human health or safety Protection of animal or plant life or health Protection of the environment Prevention of deceptive practices …Inter alia… Avoid unnecessary obstacles to trade Article 2.2 Legitimateobjectives Article 5.1.2

17. Carbon footprinting and energy efficiency discussions in the WTO

18. Global Proliferation of PCF – Key Examples of National Schemes All follow ISO lifecycle analysis principles and harmonizing with ISO 14067, but with specified methodologies (and labels) • UK – PAS 2050 • Carbon Trust, Carbon Reduction Label • Becoming a world standard • used by companies in United States, China, Korea, Australia, etc • Japan – TS Q0010 • Reliance on PCR • July 2010 revision following road testing • Pilot project 2009-2011 • France – BP X30-323 • Multi-criteria, Mandatory? • Road testing starting 1 July 2011 • Multiple labelling formats will be tested by firms in 2011 trials

19. Other Emerging Government Schemes • Korea – Korea Carbon Footprint Label • New Zealand – National GHG Strategy for agricultural exports • Chile – wine, agricultural goods • Thailand – Carbon Reduction Label and Carbon Footprint Label • Chinese Taipei – Carbon Label • Singapore – Singapore Carbon Label • China – carbon footprint label on sea scallops 24 October 2010

20. Concerns expressed in the CTE Lack of transparency Cost of conformity assessment Lack of harmonization Harmonization is underway on methodology (for government schemes), but labels and communication of claims of vary greatly

21. Concerns expressed in the CTE Market access impacts of the proliferation of private standards Non-neutrality of CFP methodologies Confusion of consumers created by multiple labelling schemes

22. Key Characteristics of Emissions/ energy efficiency standards Emissions/ energy efficiency standards and regulations can be… Based on design Based on performance Prevalent to improve energy efficiency in appliances and buildings  more flexibility Best used when few options for controlling emissions Japan’s Top Runner Program (the energy performance of the most efficient model (e.g. household appliances)on the market is used to set a target for all manufacturers.

23. Key Characteristics of Emissions/ energy efficiency standards Emissions/ energy efficiency standards and regulations can be… Based on design Based on performance Defining products Defining processes May result in direct environmental outcomes, as they improve energy efficiency or limit emissions to a certain level during production Mainly address energy efficiency & emissions related to the use of the product

24. Key Characteristics of Emissions/ energy efficiency standards Emissions/ energy efficiency standards and regulations can be… Based on design Based on performance Defining products Defining processes Mandatory Voluntary ENERGY STAR (United States) Minimum Energy Performance Standards (MEPS) for appliances (Australia)

25. Key Characteristics of Emissions/ energy efficiency standards Emissions/ energy efficiency standards and regulations can be… Based on design Based on performance Defining products Defining processes Mandatory Voluntary Public Private Minimum energy-efficiency performance standards for major domestic appliances (Canada) Leadership in Energy and Environmental Design (LEED) in the building sector (United States)

26. Key compliance tools: Labelling Most OECD countries (energy-efficiency labelling) Scope Many non OECD countries, e.g. South Africa, Argentina, Sri Lanka and Tunisia Also examples of voluntary energy labelling programmes for household appliances (E.g. Thailand, Hong Kong, China, India, Brazil)

27. Key compliance tools: Labelling Most OECD countries (energy-efficiency labelling) Scope Many non OECD countries, e.g. South Africa, Argentina, Sri Lanka and Tunisia Product’s energy performance/emissions levels while in operation Information covered e.g. EU, Australia, Canada and US require energy-efficiency labels for several household appliances Product’s entire life-cycle, including its energy efficiency e.g. Nordic Swan, German Blue Angel and the EU’s eco-label Flower  The issue of food miles

28. Key compliance tools: Labelling Comparative labels  compare performance among similar models Type of instrument e.g. for household appliances in Australia, EU, Canada, US, Brazil, Tunisia, China, Thailand and Korea Endorsement labels  Seals of approval assuring consumers that a product meets certain criteria e.g. Energy Star label (US), Brazil, Thailand and China (Certificate for Energy Conservation Product)

29. Key compliance tools: Conformity assessment to determine whether the requirements in standards & regulations are fulfilled give consumers confidence in the integrity of products Objectives add value to manufacturers’ marketing claims

30. Key compliance tools: Conformity assessment Testing Ex post efficiency testing on labelled appliances (Electricity Generating Authority of Thailand) Inspection In the building sector, the Leadership in Energy and Environmental Design (LEED) (US) Type of instrument Certification Mark that energy performance of regulated energy-using products has been verified (Canada) Accreditation Metrology

31. Environmental effectiveness Increase in energy efficiency of products, e.g. electrical equipment In California, the energy use of refrigerators in 2000 was more than two-thirds lower than in 1974 (energy-efficiency standards are in place and regularly updated since the late 1970s) Measurement tools Behavioural changes of consumers and manufacturers In the United States, recognition of the Energy Guide label was found to be quite good; however understanding was limited, with respondents unable to determine which appliance was more energy-efficient, based on the labels

32. Current Developments in Domestic Climate Mitigation Measures Carbon footprinting and energy efficiency labelling schemes and relevant WTO rules and activities Ludivine Tamiotti, Counsellor Trade and Environment Division, WTO ludivine.tamiotti@wto.org