Labelling schemes are information-based instruments, can raise awareness of the benefits of energy efficiency at all levels in industry. By making the lifetime costs of available technologies more transparent, these instruments make it easier for firms to choose energy-efficient options. The instruments have no direct impact on production costs or greenhouse gas emissions, but they can affect stakeholder perceptions and decisions.

Although fairly easy to implement, they require public funding and institutions to organize and develop campaigns. Energy-efficiency labels are one of the easiest and cheapest policy tools and can lead to large energy savings. Labels describe the energy performance of equipment in terms of average energy efficiency for consumption or costs, thus enabling consumers to make an informed purchasing decision. Labels help overcome information barriers and encourage the adoption of more efficient equipment. They include endorsement labels, which certify that a product meets preapproved criteria; information labels, which inform consumers of a product’s performance; and comparative labels, which allow consumers to compare the performance of similar products. Labelling often precedes standards by encouraging manufacturers to compete based on energy efficiency and preparing consumers and producers for new or stricter standards. Mandatory labels can lower the transaction costs associated with assessing energy performance. If clearly designed and accompanied by information campaigns, mandatory labels can encourage manufacturers to design more energy-efficient machines and processes.

While labels help transform the market for high-efficiency equipment, minimum efficiency performance, standards aim to reduce the market share of the least efficient models. Standards are usually imposed by energy authorities, often through technical regulations that typically prohibit manufacturing, selling and importing nonconforming equipment and appliances. Setting standards for equipment such as boilers, motors, lighting and space conditioning can boost demand for energyefficient equipment and eliminate the least efficient models from the market.

Standards can also reduce other inefficiencies and losses indirectly related to energy, resulting in a cascade effect that drastically cuts energy intensity. These standards, used widely in many countries and regions,can also spur competition among manufacturers to improve the efficiency of their equipment.