How product differentiation helps to drive energy efficiency

In the context of the series of short digital interviews launched by APPLiA, the thirteenth episode features Mr Matteo Rambaldi, APPLiA’s Policy Director for Energy, on how product differentiation helps to drive energy efficiency.

• What is product differentiation and why is it important? 

By nature, there is a wide range of criteria consumers look for their products to meet before they decide to purchase, including the design, the brand  down to the energy efficiency, durability of the appliance, and last but not least, the budget. All these factors play a crucial role in the decision-making process. For this reason, “it is important to differentiate between efficient and less-efficient products for the same application, in order to identify the most suitable option based on an individual's needs,” began Rambaldi. Water heaters are one such example of a product of which there are a number of variables that consumers may require the product to meet, such as the building and the possibility to install a heater, availability of local renewable energy, and, of course, the price range. In a nutshell,  “there is no one-size fits all solution,”.  

• What role does the energy label play in enabling differentiation? 

Since its introduction in 1992, the Energy Label has been driving consumer choice by helping EU citizens  gain a true understanding of the different affordances offered by each product on the EU market, while allowing for the development of new technologies and innovations, towards progressively more energy efficient solutions.  Overall, in the words of Rambaldi, the Energy Label has been “key to the development of the sustainability of home appliances allowing consumers to choose the most suitable product, based on their individual needs and preferences, and possibilities.”. 

• What would be the implications of the EU’s proposed rescaled label for some appliances? 

Whilst the home appliance sector supports and fully commits to the decarbonisation objectives set out by the EU Green Deal, it is key to  outline  the potential risk associated with the introduction of common labelling schemes. “Squeezing products of the same technology, with different energy efficiency and saving potentials in the same class, would risk driving consumers towards the cheapest option, and not necessarily the most efficient one,” detailed Rambaldi. As a knock on effect, the market could be severely impacted by manufacturers competing against each other in a ‘price war’, rather than improving the energy efficiency of products, due to the inability to effectively differentiate between products.

• What solution would you envision to tackle the issue? 

Overall, the home appliance sector holds product differentiation in high regard when it comes to providing consumers with greater choice and facilitating a transition towards lowering CO2 emissions. In this sense, consumers can maximise the capabilities of the rescaled label when it comes to obtaining all the necessary information before choosing the most efficient product among the ones they need and can afford. “Incentives should be introduced at EU level to prioritise the ever-developing drive towards innovation of the sector and this way empower consumers to progress towards making more energy efficient choices,” concluded Rambaldi.