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Home Energy Labels: Useful under certain conditions

By : Maryse Guénette
Photo Credit: Pixabay

It certainly seems like a good idea for consumers to have access to energy labels that would allow them to make quick, informed decisions, such as when they are buying a home or carrying out renovations. But before this can happen, there are a few factors that need to be borne in mind.

It’s a sure bet you’ve seen the words EnerGuide and Energy Star before. These are the names that figure on two relatively well-known labels. The first is “the official mark of the Government of Canada for its energy performance rating and labeling program for key consumer items,” and the second certifies products as being the most energy-efficient on the market.

If you have recently purchased a property, you may have obtained information on its energy expenditure. Or maybe you thought it might have been helpful to have a label telling you about it. Similarly, if you’ve done any renovations, you may have wanted to obtain information to help you make the right choices to improve the energy efficiency of your home.

If an energy label were made systematically available in the housing sector, would consumers find it useful? And if so, under what conditions? This is the question posed in the study entitled Home Energy Labels in Canada: How Well Do They Serve Consumers? published by the  Consumers Council of Canada (CCC).


What consumers want

The study first of all focuses on why consumers are concerned about energy efficiency. “We asked the focus group what the factors were that motivated them to improve the energy efficiency of their homes,” says Edith Yu, a manager at buildABILITY  and co-author of the study. “They told us that the top factor was to lower the energy utility cost. The second was increase comfort in their home.”

Some of the participants in the survey also said that they would find it interesting to be able to compare the energy efficiency of their property.

They wanted to know whether their homes were better or worse than others in terms of energy efficiency.”

Edith Yu, a manager at buildABILITY  and co-author of the study

This led the authors to conclude that what is needed is a label that makes such comparison possible (e.g. EnerGuide) rather than a seal of approval (e.g. Energy Star).

What about environmental motivations? They didn’t seem to figure. “Cutting down carbon emissions and trying to reduce their impact on climate change doesn’t make any real impression. It’s rather abstract. And as several studies have shown, consumers need to understand before they can act. Money, like the energy bill, is easier to understand than carbon emissions.” Note that the data was collected in 2018; the results might be a little different today.

It’s natural for consumers to be concerned about what affects them most closely.

Buyers and owners have different information needs. People who are about to buy a home will want to know about the energy efficiency of the houses they are visiting and whether they will require any work, while those who already own a home will want to know how to improve its energy efficiency.”

Edith Yu

Crucial criteria

Why would it be good to have an energy efficiency label? “To provide information about the energy efficiency of a home and to permit comparison with other properties,” Yu says. “It could also “inspire consumers’ confidence in the energy information they are given and to be motivated to take action to improve the energy efficiency of their home.”

For these goals to be achieved, the label must meet certain criteria. “So a consumer has to be able to translate this information into a tangible benefit, to make a choice based on their ideas or their perceptions and values. Information has to be clear, understandable, readable, memorable and trustable. If a label is written in incomprehensible technical jargon, it doesn’t really achieve anything.”

All the information given must be related to the consumer’s real interests. “If this is the case, the label is generally well received,” Yu says. “A good energy label is one that consumers can use as a basis for action.” In a memo sent after the interview, Yu said that what surprised her most was “the importance of behavioural economics.” She says that in the past, energy labels were designed by technicians for technicians. But labels that are “technically sound” are longer good enough.

Finally, the irrationality of certain consumer decisions also has to be taken into account.

The traditional view  is that people are capable of making logical decisions by weighing the pros and cons. But this is not always the case. The decision-making process is super complex and can be disrupted by a variety of factors, such as limited knowledge or lack of time. All this leads consumers to take mental shortcuts.”

Edith Yu

Participants’ preferences

As part of the study, consumers were asked to comment on labels. The two labels they preferred, the  U.K. Energy Performance Certificate (chosen during the survey) and the Vermont Energy label (chosen during the focus groups), had a lot of information in common, which may have been discouraging.

“We found it’s not really about the amount of information,” Yu says, “but about how the information is presented. ” According to the study, presentation really does play a role in consumers’ interest in the label. So the information has to be ranked effectively, and what is most relevant for the consumer—namely, energy expenditure– needs to be highlighted.

The label should also be in bright, bold, contrasting colours.

The most colourful labels are usually the ones you remember best,” Yu says. They’re also the ones considered to be most trustworthy.”

Edith Yu

Labels also have captions, symbols and scales to make them easier to understand. On this point, it should be noted that the use of a discrete scale—one that presents the information in increments rather than continuously—was well received by most participants, who found it relatively easy to read and understand.

The study also found that most participants would like information about the energy efficiency of their homes to be included on their monthly energy bills. Younger participants, however, said they would prefer it to be sent to them by other means (an app, e-mail, website or smart thermostat). It should be noted that only a minority of participants stated a preference for a “paper” energy label.

The CCC study concludes with a series of recommendations for further study. “There were are a lot of points we weren’t able to address, such as privacy issues,” Yu said. Participants in the study did raise concerns about privacy issues when information is transmitted through an app, so it would be interesting to look at that.

The Study

Home Energy Labels: How well do they serve consumers? (Consumers Council of Canada, 2019) examines consumer motivation with regard to home energy labels and the features such labels should have. It focuses on the usefulness and functionality of such labels, how consumers might understand them, and how they might affect their behaviour. The purpose of the study is to make recommendations for designing effective labels and getting consumers to use them.

To accomplish this, the researchers conducted a literature search, interviews with key informants from consumer and industry groups, a national web survey, and three consumer focus groups.