Setting the standard: How Central America is harmonising energy efficiency for appliances

Cooling currently accounts for around 10% of global electricity demand, and its share continues to increase. In Latin America and the Caribbean, the number of cooling degree days, which illustrates when daily temperatures pass a certain heat threshold, is projected to rise 29% to 43% between 2041 and 2060 compared with the period between 1990 and 2000. This will increase demand for cooling significantly.

Today, only around 15% of households in Latin America and the Caribbean own air conditioners, even though needs are already high. Ownership of household appliances including air conditioners went up 20% in the 2010-22 period, reflecting rising incomes and improving living standards, and is projected to quadruple by 2050. The market is expanding rapidly to improve people’s lives, but without efficiency this can cause serious strain, raising costs to consumers and greenhouse gas emissions from the power sector.

Increasing access to the most efficient air conditioners available moderates growth in energy demand and reduces carbon emissions at little or no cost to consumers. Efficient cooling appliances also translate into lower consumer bills. Recent studies reveal that households on average spend 35% to 42% more on electricity per year when they own air conditioners – emphasising the need for greater efficiency as it consistently lowers lifetime running costs. Further, contrary to common perceptions, International Energy Agency (IEA) analysis shows that more efficient air conditioners do not necessarily come with higher upfront costs. Importing more efficient air conditioners and refrigerators into the region is also projected to yield significant additional benefits, including anticipated energy savings of 20 terawatt hours (TWh) and economic savings of around USD 3.4 billion from 2020 to 2030.

Efficient cooling systems also reduce risks of heat-related illnesses, enhancing public health, and improve the overall quality of life for many people, boosting productivity and comfort in homes, educational institutions and workplaces. Additionally, they bolster the climate resilience of power systems, particularly in the context of escalating temperatures resulting from climate change.

Within Latin America, the Central American Integration System (SICA) is helping to lead the way on efficiency improvements. The economic and political organisation encompasses Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and the Dominican Republic – countries with a combined population of 62 million and GDP of around USD 419 million. SICA has a deep knowledge of the region’s clean energy potential, opportunities and challenges, and it plays a vital role in regional standards development, particularly in the pursuit of shared minimum energy performance standards (MEPS) for key appliances.

In recent years, efforts have been underway within the SICA region to establish a regionally binding standard for energy performance of appliances. This initiative currently includes lighting, refrigerators, motors and air conditioners. Several SICA member countries have also put in place complementary national standards and labelling programmes, ranging from voluntary to mandatory measures, that target a range of household electric appliances.

A landmark moment arrived when SICA successfully introduced the first regional regulation on energy efficiency, specifically for inverter air conditioners, in 2022. This binding policy, that was informed by IEA analysis and advice, was adopted by six out of eight member countries and has already taken effect in several of them.

Energy efficiency standards and labels for appliances offer a win-win-win combination, benefiting consumers, manufacturers and the environment. For consumers, MEPS offer clear and reliable insights that help them make informed purchases, while guaranteed energy performance reduces energy consumption and bills. They also encourage manufacturers to innovate and foster competition, since their reputations are based on high performance. Additionally, these measures play a key role in global climate mitigation and are essential to affordable clean energy transitions. Countries that have adopted rigorous standards and labelling programmes in recent decades use 15% less electricity today than they would otherwise have used, according to IEA analysis.

Regional harmonisation has a large role to play here. Aligning technical specifications, testing methods and labelling criteria ensure consistent performance of appliances at lower cost by facilitating cross-border trade, larger markets and easier market access for manufacturers. 

Recognising the significance of these measures, the IEA actively supports countries worldwide in the design and implementation of energy efficiency standards and labels, an essential part of the journey to a clean energy future.

The IEA and SICA started working together in 2021, building on longstanding partnerships in Central America to support clean, secure and inclusive energy transitions.

Energy efficiency and the climate resilience of electricity systems has been a central part of this collaboration. The IEA actively supports SICA's Technical Group on Energy Efficiency through the Agency’s Energy Efficiency in Emerging Economies Programme with regular updates on MEPS and labelling programmes for a range of products worldwide. This includes energy efficiency comparisons across various countries and regions, testing methodologies, compliance protocols, label usage and emerging trends.

In terms of MEPS development, the IEA supports the SICA Secretariat and its representatives from member countries. The IEA also forges consistent collaborative partnerships with the SICA Presidency, which undergoes a rotation every six months. For example, during the Costa Rican Presidency in 2021, the IEA focused on developing MEPS recommendations for air conditioners. This process included technical exchanges through presentations, meetings and a report outlining pathways forward, which supported the introduction of the first regional regulation for inverter air conditioners in 2022. 

SICA’s 2022 regulation on air conditioners was a significant achievement in advancing regional standards on energy efficiency. By aligning technical specifications, the SICA region is streamlining cross-border trade and empowering consumers with consistent information – underscoring the importance of regional and international collaboration in advancing energy efficiency to benefit consumers, manufacturers and the environment.

To replicate this success worldwide, strong political commitment is essential. Governments need to allocate resources and establish policy frameworks to support the development and enforcement of regional energy efficiency standards and labels, including the harmonisation of testing methods and labelling criteria. Through those strategic policies, standards and investments, countries can harness the transformative potential of energy-efficient cooling to improve the well-being of their citizens and create more sustainable, resilient homes, businesses and communities.

This work forms part of the Energy Efficiency in Emerging Economies Programme, supported by the Clean Energy Transitions Programme, the IEA’s flagship initiative to transform the world’s energy system to achieve a secure and sustainable future for all.