Impact of eco-labels on fuel dispensers

Potential effects

Benefits

There are several ways in which the upcoming Swedish eco-labels on fuel dispensers may contribute to a sustainable mobility with small greenhouse gas emissions.

• They couple an abstract threat like climate change to a personal choice, and the physical action to fill a car. Such a coupling is a necessary to trigger personal behavior changes according to the behavioural scientists.
• All personal responses taken together may create a public pressure from below that paves the way for more radical political action, such as effective cap-and-trade mechanisms, and an ultimate ban on fossil fuels.
• Conversely, as cap-and-trade mechanisms force alternative fuels into the market, the eco-labels make it possible to distinguish better or worse such alternatives, enabling an even quicker transformation of the fuel market than that required by the cap. From this perspective eco-labels and regulations go hand in hand rather than being alternative measures.
• Thanks to the standardization of the information presented on the eco-label (and on the web), fuel companies are given the opportunity to compete with sustainability in a fair manner.
• The fuel companies will think twice before they introduce questionable raw materials, such as palm oil from Indonesia, since they will have to disclose this information on the pump. Thus the labels may have a preemptive effect.

The personal responses to the eco-labels may include, in more detail:

• Choosing an alternative fuel rather than a fossil fuel, if it is available at the station you happen to be at, and if your car allows it
• Choosing another, nearby fuel station with better sustainability data next time you fill your car
• Contemplating buying an electric car next time, as you see the striking differences between electricity and gas on the eco-labels
• Contemplating driving less often, starting to look for transit, or for bike lanes that you can use to commute
• Standing up for sustainable mobility and a sustainable society in a wider sense

Drawbacks

• Even though the climate impact of the fuel will be shown in a visually striking way with color coding, there is no explicit emotional message or climate change warning contained in the upcoming Swedish eco-labels.
• The relative complexity of the given information might reduce its impact on the consumer.
• The eco-labels will most probably not contain any health information. The Swedish government decided to let that part of the labelling go, in part because it would be too much information to digest at the pump for the average customer, in part because it depends on the vehicle burning the fuel. Possibly, such health information will be disclosed on the company webpage together with the detailed sustainability information. The Green Motorists are also campaigning for eco-labels on cars that disclose the exhaust emissions that harm our health.

Drawback or benefit?

The information on the eco-label will not describe the very fuel drops that we pour into our car, but the total volume of the fuel in question sold by the retailer the previous year. This makes the coupling between the label and the physical product weaker than in the case of energy labels, for example.

On the other hand, it conforms to the way in which the climate impact and the origin of electricity are already disclosed within the EU.

Also, it gives consumers the opportunity to compare the overall sustainability of the fuels offered by different fuel companies. In this way the labels may become an even more effective market mechanism than if they had reflected the fuel drops we buy here and now. It is the fuel compaines that are the acting subjects on the market rather than the individual gas stations, and the information should reflect these actors as clearly as possible. To get a clear picture of the efforts by the companies to improve the sustainability of their products, we need to know the outcome of these efforts during an extended period of time.

To focus on their sales during the previous year is reasonable in this respect, and it is ideal since the retailers report this information to the Swedish Energy Agency, who inspects and approves it. This official quality stamp contributes to the trustworthiness of the information provided on the eco-label, and to its fairness as a market instrument.

Opinion polls

In order for the potential benefits listed above to translate into actual market forces that push our fuels towards sustainability, the citizens must be – or become – receptive and interested. To check whether they already are interested, the Green Motorists have commissioned two opinion polls, which showed virtually the same results. In each of them, a representative sample of about 1 000 people between 18 and 79 years of age from all over Sweden was asked three questions.

To the question whether it is important to get information on the pump about the climate impact and origin of the fuel, 41 percent answered that it is very important or rather important. 29 percent answered that it is rather unimportant or not important at all.

To the question whether they would actively choose or avoid a fuel based on its country of origin, if given the opportunity, 72 percent answered that they would do so, or would probably do so. 23 percent answered that they would not do so, or probably not.

To the question whether they would preferably fill their car at fuel stations run by retailers who disclose the climate impact and the origin of their fuels, 54 percent answered that they would probably choose such retailers rather than those who do not provide such information, whereas 34 percent answered that they would probably not care.

These opinion polls were made in 2014 and 2016 before the legislation that demands eco-labels was conceived. The last question was motivated by the idea of ours at the time that some fuel company may choose to make a disclosure of its own, even if there is no legislation demanding it.

In short, the interest from the public seems considerable even before the eco-labels have materialized. We may expect that it grows even more when people can actually see them each time they fill their cars.

Academic review of potential effects

James R. Brooks, Kristie L. Ebi, Global Challenges, published online 21/7 2021: Climate Change Warning Labels on Gas Pumps: The Role of Public Opinion Formation in Climate Change Mitigation Policies  "The analysis reveals warming labels may activate extant climate concern norms and shift public opinion toward long term support of sustainable transportation emissions policies and practices."

Experiences from European energy labels

The upcoming eco-labels on Swedish fuel dispensers were inspired by the European energy labels. Numerous studies have shown that these labels have increased the energy efficiency of many products on the European market, and reduced the overall energy consumption as compared to Business as Usual. In so doing the greenhouse gas emissions have also decreased. We may therefore expect that eco-labels on fuel pumps will have analogous effects. The EU regulates energy consumption in two ways: the Ecodesign directive 2009/125/EC closes the door to products with very poor energy efficiency, whereas the energy labelling regulation (EU) 2017/1369 sets a framework for energy efficiency grading of the allowed products. The overall experience is that the Ecodesign directive has indeed got rid of the worst products, and that the energy labels have triggered innovations that gradually improve the energy efficiency of the products that remain on the market.

Adapted from an illustration by the Swedish Energy Agency

With eco-labels on fuel dispensers we get an analogous two-way regulation of the sustainability of transportation fuels: The cap-and-trade mechanism in the fuel quality directive and the sustainability criteria in the renewable energy directive close the door to fuels with very poor sustainability, whereas eco-labels on fuel pumps grade the sustainability of the allowed fuels. We may expect effects of these two-way fuel regulations that are analogous to the effect of the two-way regulations of the energy efficiency of products.

More specifically, evaluations commissioned by the European Commission and Parliament (see here, here and here) suggest that the Ecodesign directive together with the Energy Labelling Regulation has had, or will have, the following effects:

• The energy savings from regulated products will be 18 % in 2020, as compared to a Business as Usual scenario, representing 9 % of the current total energy consumption within the EU. In 2030, the savings from regulated products will increase to 30 %, representing 15 % of the total energy consumption.
• In 2020 the reduction in greenhouse gas emissions associated with regulated products will be 17 % compared to Business as Usual, representing 7 % of the total emissions within the EU. In 2030, the reduction of emissions associated with regulated products will rise to 30 %, representing 11 % of the total current emissions.
• Benefits are perceived to outweigh costs, both for organizations and for society as a whole.
• The measures have not affected the long term downward trend of prices (with the exception of lighting and circulators).
• The measures have had little perceived impact on overall market sizes or market structure.
• The impact on the competitiveness of the manufacturers targeted by the measures was perceived as positive, in particular for energy labelling.
• The impact on innovation is perceived positive across product groups, in particular for energy labelling.

Pictures from Ecodesign Impact Accounting: Overview Report 2016

Swedish evaluation of energy labels

In 2016 the Swedish Energy Agency evaluated the public attitudes to energy labels. About 2 000 answers from a web panel were distributed in a representative manner with respect to age, sex and place of residence.

It turns out that 9 out of 10 Swedes know about energy labels. It seems that men have a higher degree of knowledge than women, but that women use the labels more often to decide what product to buy.

Naturally, those who understand the labels use them and are influenced by them to a higher degree. This underlines the importance of making labels easy to understand in order to maximize their impact.

There was no product category for which more than two thirds were able to understand the energy label at first sight (see scorecard below). Generally, the less information displayed on the label, the easier it is to understand, with lightning at the top (64 %) and heating systems at the bottom (37 %).

To improve the intelligibility of the label many respondents asked for an easily accessible accompanying description. Therefore, such a manual to eco-labels on fuel pumps must be made available, and it should be referred to from the label itself.

However, there is no clear correlation between the intelligibility of the label and its perceived importance, and how often it is used to make a choice. Energy labels on heating systems are hard to understand but are often used, for example. The respondents find those labels important that describe products which they perceive as having a large environmental impact and consuming a lot of energy. This go for heating and white goods, but not for TV sets, lightning, and tyres - for which other qualities than those displayed on the label were perceived as more important.

These results suggest that eco-labels on fuels (and cars) could have a large impact on the market, since these products correspond to a continuous use of energy, just like fridges and heating systems, and most people are aware of the environmental hazards they are associated with.

Evaluation of the EU car labelling directive

Some European countries demand eco-labels on new cars that disclose their energy efficiency and their emissions. The design of these labels is not governed by the energy labelling regulation but by the car labelling directive.

The car labelling directive was evaluated in 2016. A summary of the conclusions is given at the bottom of our page We Want to Know: About time to put eco-labels on new cars in Sweden.

A more detailed description of the upcoming eco-labels

The winding road to eco-labels on Swedish fuel dispensers

The Green motorists' wider campaign We Want to Know

Read more about the Green motorists