Incentives to drive water labelling in the UK

I wrote most of this post on a train travelling to Frankfurt for ISH 2017 "The world’s leading trade fair The Bathroom Experience, Building, Energy, Air-conditioning Technology, Renewable Energies". Many of the 2,400 exhibitors were showcasing the latest in bathroom technologies and innovations.

The main question on my mind was "how can we get an effective water label in the UK to incentivise water efficient products and a market transformation in stores?"

The European Water Label story to date

The UK currently has the European Water Label, the Water Technology List and Smart Approved Watermark to help identify water efficient products. As of 2015 the Water Label had 98 registered brands and 11,000 registered products (EWL Blog). Although there has been some increase in use of the label in stores and online, it is still often not visible. I’ve seen this personally when buying fittings in stores across London for the Waterwise Household Water Efficiency Training. The links with building standards and the Waterwise/ BMA water calculator has helped drive use for new developments. When I met the European Water Label staff at ISH2017 they explained that progress is being made with the label now being visible in large stores such as Tesco, Argos, and Homebase/ Bunnings. The label is due to join up with the German water label and others, so how can we maximise its effectiveness in the UK, especially with exiting the EU?

I think we can learn from experience in Australia and the USA to further develop and strengthen water labelling the UK. In Australia rebates supported the initial market transformation and laid the groundwork for mandatory standards (WSAA).

European Water Label

Water efficiency labelling experiences internationally

A major enabling factor for water efficiency in Australia and the USA has been strong water efficiency labelling programmes. The latest review of the Water Efficiency and Standards Labelling (WELS) scheme in Australia calculated a saving of 70,000 Ml/year water, 5.5 MT/year of carbon dioxide, and AUD$520m/year in household utility bill savings. The labelling scheme has been combined with a range of wider programmes including rebates on efficient product and appliance to help transition the market.

Modelled water savings for WELS in Australia

In Western Australia, labelling, combined with a rebate scheme, resulted in 170,000 new water efficient washing machines being installed. The number of Perth households installing dual flush toilets increased from 36% in 1992 to 84% in 2006 and front loading washing machines increased from 7% to 25%.

The rebate scheme ran from 2003-2009 with the rebate funded by the state government and delivered through the main water company. The key findings included for products in the rebate scheme include:

• households that claimed a rebate were more likely to have a higher level of consumption than those who did not claim a rebate;
• the installation of private water supplies and rainwater tanks resulted in large reductions in water use;
• showerheads, swimming pool covers and washing machines all showed a decrease in use;
• after installing subsurface irrigation systems or greywater systems, households showed a significant increase in water use.

Water efficient showerhead and washing machine rebates were demonstrated to be the most cost effective (cost/m³ water saving) for the community and the water company. The programme was originally funded by the state Government, however the latest scheme focussing on shower head replacement and discounts for upgrading to a new dual flush toilet is water company funded.

Water efficiency labelling has been a key part of urban water policy impacting on consumption in Australia as outlined in the figure below. Although we have seen some market transformation in the UK we are missing incentives and minimum standards that along with behaviour change can help drive down water consumption. Additionally, the review of WELS in Australia identified four state energy efficiency programmes for which WELS rated shower heads were a key retrofit item, seven national and state building codes/ regulation linked to WELS, and four tenancy laws across states linked to WELS. Water labelling needs to be a strong component of multi-element regulation to improve water efficiency.

Policy context of WELS

The US EPA’s Watersense labelling scheme has saved more than 1.5 trillion gallons of water since 2006 (approx. 6.8 million megalitres), 78Mt of carbon dioxide, and USD$32.6 billion in savings in consumer water and energy bills. In 2015, 16,110 labelled produced were available. The programme also extends to labelling of new homes and through social media and drought communications is well integrated into overall water efficiency programmes. Rebate programmes have been implemented across many utilities and cities (Watersense rebate finder).

USEPA Watersense labelled devices

The Watersense programme is currently under threat due to funding cuts. The infographic below outlines why labelling is important in the US: saving taxpayer money; supporting jobs; supporting businesses; providing customer choice; providing a cost effective service; and, protecting water resources.

Moving to incentive schemes to support water efficiency in the UK

A catch-22 situation currently exists, whereby water companies don’t want to promote water efficiency labelling until it is more visible in stores, and that isn’t likely to happen without water company or government-led incentives (rebates) for labelled devices.

Rather than water companies paying for water efficient devices themselves and visiting households to install these they could use incentives (rebates) to drive this change. For example, a household who buys a water efficient labelled showerhead can then claim a rebate from the water company (e.g. £15).

1.    Traditional Water Company Programmes – water company pays up-front, products only installed when suitable but may not be installed by residents or removed if not meeting expectations.

2.    Customer rebate based approach – Customers are incentivised to choose a water efficient product at a moment of change. They increase pressure on local retailers to stock labelled devices. This results in a market transformation towards more efficient devices.

3.    Developer rebate based approach – reduced costs for the developer incentivise them to install more efficient devices based on the water label. However, this will only lead to market transformation in their existing supply chain.

The benefits of this incentive approach (customer rebate – second example) include:

• The costs of the scheme would be the same if not less than a rebate programme and could address a key moment of change
• Consumer choice in fittings that match householder’s bathroom decor and they can pay more towards a fitting if they wish.
•  Market transformation towards labelled products – more stores both online and on-the-ground will stock and promote labelled water efficient devices if consumers are seeking these

How can we achieve this?

• Trials in several water company areas with local retailers to demonstrate consumer demand and potential water savings
• Consider new technology options that could benefit from rebates (i.e. point of use shower monitors, smart ICT taps etc.) – setting innovation challenges for bathroom manufacturers
• Education and awareness programmes linked to the water label joining up water companies, product manufacturers and retailers. Building the label into wider water efficiency projects and communications.
•  Make the water label an explicit part of energy efficiency retrofit schemes and building regulations.
•  Larger scale programmes in water company WRMPs and developer rebate programmes
•  If retail competition for households is introduced, developing incentive programmes in order for retailers to gain and retain customers

Conclusion

An effective label can support market transformation and needs to be linked to incentives initially and minimum standards in the future. As water companies are looking to deliver innovative and larger scale demand management programmes, labelling could significantly compliment and further these programmes.