Canada pauses home appliance energy-efficiency update to sync with U.S.

The federal government has delayed implementing energy-efficiency regulations for major home appliances in order to align with new stringent standards announced by the U.S. Department of Energy.

A briefing note obtained by Canada’s National Observer through a federal access-to-information request reveals how Natural Resources Canada is adapting to the U.S.’s new plan to increase energy-efficiency standards.

Major household appliances — like washers and dryers, refrigerators, freezers and dishwashers — account for approximately 40 per cent of the energy used in a typical Canadian home, according to the 2016 Canada Energy Regulator market snapshot. There have been big improvements in the efficiency of these products: energy savings from using major household appliances purchased in 2014 is approximately 35 per cent compared to a set of appliances purchased in 2000, the regulator reported.

Improving energy efficiency wherever possible is key to lowering greenhouse gas emissions and fighting climate change.

Originally, Natural Resources Canada proposed requiring any products manufactured on or after July 1, 2023, to be ENERGY STAR certified. Created in 1992 by the U.S. Environmental Protection Agency, the ENERGY STAR program lets consumers know they are buying energy-efficient products and is a standard recognized internationally as a mark of energy efficiency. Canadians can buy ENERGY STAR rated products in stores right now, but less energy-efficient appliances are also still for sale. Natural Resources Canada did not respond by publication time.

The original proposal to make ENERGY STAR mandatory “was really a strategic way for Canada to improve energy efficiency in the context of a lagging U.S. administration,” said Brendan Haley, director of policy research at Efficiency Canada.

The Trump administration was not updating efficiency standards products, he added.

In February, the U.S. Department of Energy proposed new standards that will exceed ENERGY STAR ratings, anticipated to result in standards “set at the highest level technologically feasible and economically practical,” according to a briefing note signed by federal Natural Resources Minister Jonathan Wilkinson on June 7. In response, Natural Resources Canada has delayed implementing any regulations for 18 months in order to match the U.S. regulations under development.

The new U.S. rules are expected to be finalized sometime in 2024 and manufacturers will have to comply by 2027 — giving them three years to retest and redesign products. Canada is a much smaller market than the U.S., and the two countries have a long history of collaborating on energy policy, so the decision to move in lockstep with the U.S. did not surprise experts interviewed by Canada’s National Observer.

Industry stakeholders don’t want Canada to implement more stringent standards ahead of the U.S. But at the same time, Natural Resources Canada notes waiting to align with U.S. standards in 2027 means forgoing energy and greenhouse gas emissions savings in the meantime when people buy less-efficient appliances — cumulatively, 1.5 megatons of emissions savings and 18.7 petajoules of energy savings between now and 2050 (18.7 petajoules is equivalent to the combined annual energy consumption of roughly 206,630 Canadian homes).

The briefing note simply highlights “the cost of waiting,” said Haley. It is unclear what the department has and hasn’t figured into that calculation. Presumably, the energy savings from more stringent standards would offset the cost of waiting at some point in the future, he mused, but that information is not in the memo. To offset those costs, Canada could look to forge ahead of the U.S. in areas like heating and cooling, said Haley.

Appliances covered by these rules currently account for eight per cent of residential electricity use in the United States, according to the Department of Energy. It’s been more than a decade since the U.S. standards were last updated, and the department estimates the new standards will save American consumers approximately US$3.5 billion per year on their energy and water bills. Over the span of 30 years, the department says the new standards are expected to reduce carbon dioxide emissions by an amount roughly equivalent to the combined annual emissions of 29 million homes.

The document says industry stakeholders, including the Association of Home Appliance Manufacturers, urged Canada to align with the U.S. “given the integrated nature of the Canadian and U.S. markets.”

Canada and the U.S. have “a really long history of co-operation” when it comes to energy policy, said Debora VanNijnatten, a professor of political science and environmental studies at Wilfrid Laurier University, in an interview with Canada’s National Observer.

For example, the Canada-United States-Mexico free trade agreement involves a commitment to “trilateral communication on energy performance standards” and efforts to harmonize those standards. And, in 2021, Natural Resources Canada and the U.S. Department of Energy signed a memorandum of understanding committing to collaborate on new and updated energy-efficiency standards and methods to test energy-using consumer products or equipment.

“For appliances, it really is a continental market,” said VanNijnatten, adding that many European manufacturers are based in the U.S.

It makes sense for Canada to harmonize with a U.S. administration that's also dedicated to improving energy efficiency, said Haley.

Now, the biggest risk is if a new administration in the U.S. “scuttles the whole deal in 2024, no gains are made, no market signals sent, and the battle to reach net zero by 2050 becomes all the more harder and more expensive with lost time,” said Efficiency Canada’s Sarah Riddell in an emailed statement to Canada’s National Observer. Because of this, Riddell and Haley maintain that Canada should have a backup plan.

However, if the new U.S. regulations pass, they are unlikely to be undone, even in the event of a new administration, VanNijnatten, says. While there is no question that the U.S. regulatory system is slow, “when you get final regulations, they're very hard to undo.” In the Canadian system, on the other hand, a majority government can “dump legislation in a heartbeat,” she added.

The briefing note says that if Canada were to move faster than the U.S., Natural Resources Canada “would expect a significant shortage of products in Canada between 2024 and 2027.”

“Very few” products currently meet the proposed standards, so industry will have to retest and redesign, “which is expected to take several years,” according to the briefing note.

Natasha Bulowski / Local Journalism Initiative / Canada’s National Observer