Good afternoon.
The Association of Home Appliance Manufacturers represents manufacturers of major, portable and floor care appliances in Canada and the United States. Our membership includes over 150 companies. The industry supports 40,000 jobs in Canada, including those in manufacturing, sales, distribution and retail.
In Canada, the factory shipment value of these products is $5 billion annually. Home appliances are very energy-efficient. A modern refrigerator uses half the energy it did a few decades ago and less energy than a 60-watt lightbulb does.
Clothes washers can save households 19,000 litres of water and more than $150 in utility costs compared to what they were 10 years ago. Today, washers are 70% more efficient yet hold up to 20% more laundry.
Both NRCan and the U.S. Department of Energy set mandatory minimum energy efficiency standards that appliances must meet. Canada has historically been slow to adopt the stricter energy efficiency standards introduced in the United States. Since 2016, the two countries have made significant strides toward harmonization and alignment. Regulatory alignment is critical to avoid unnecessary double testing and barriers to trade, and it maximizes consumer product choice.
This is why AHAM was disappointed to see the Liberal commitment to make Energy Star certification mandatory for all home appliances by 2022. Although the true meaning of this commitment is still unclear and implementation has not yet started, it has created great uncertainty in the market. Some retailers are rethinking their purchasing decisions because they do not want to be left with inventory that can no longer be sold in two years.
The commitment also contravenes CUSMA. The government sets energy-efficiency levels that all regulated appliances must meet, and these have become stricter over time. Energy Star is a voluntary program that is separate from this process. The Energy Star label makes it easy for consumers to identify energy-efficient products. It is intended to highlight the top 25% to 30%, or best in class of energy efficiency. This competition motivates manufacturers to find new innovation, and manufacturers in turn make significant investments to qualify for the program.
If the Canadian market is limited to Energy Star products, this competition ends and the mark loses meaning. The Energy Star brand is owned and trademarked by the U.S. Environmental Protection Agency. It is highly praised by both NRCan and industry alike. The brand is recognized by 85% of the public, and the logo is used around the world.
Canada is a net importer of home appliances, with the U.S. and Mexico being the predominant trading partners. Manufacturers design appliances for a single North American market. This larger market increases consumer choices, drives down costs and maximizes economies of scale. This is why CUSMA has an energy efficiency annex that promotes the harmonization of test procedures and energy performance standards.
Article 12.D.5 in annex 12-D also clearly states the support for voluntary programs such as the Energy Star to promote energy efficiency. This is in direct contrast to the government's proposal to make the Energy Star program mandatory. If the government moves forward with making Energy Star mandatory, not only will Canada be contravening CUSMA but, more importantly, Canadians will experience a significant reduction in products that are available on the market and prices are likely to go up, especially for entry-level models that are more likely to be purchased by low-income Canadians.
In fact, a staggering 41% of what is currently sold in Canada will no longer meet these requirements. More specifically, 71% of top-load washers and 50% of top-freezer refrigerators will be non-compliant and removed from the Canadian marketplace. Low-income Canadians will be disproportionally impacted. Consumer research says that 74% of consumers with incomes under $25,000 purchase top-freezer refrigerators. As noted previously, half of those would no longer be available to consumers if Energy Star were to be the new minimum standard.
Instead of making Energy Star mandatory, the government should create a regulatory framework that can more quickly update its standards. This can be done in two ways. One, the government can enact the proposed energy efficiency regulations that were announced in budget 2017. This would give the minister the power to modify standards and tests more quickly to maintain harmonization. Two, the government could also update the Energy Efficiency Act to streamline this process.
AHAM has been a strong advocate for advancements in energy efficiency standards, but making Energy Star mandatory would have negative consequences for middle-class Canadians.
Thank you.