Australia’s long-standing Energy Rating Label is widely recognised but has been insufficient to overcome the affordability barrier, which prevents many consumers from purchasing energy-efficient appliances. The next step in promoting energy efficiency requires financial support measures, digital label integration, and enhanced practical energy literacy tools to enable effective consumer action informed by energy-efficiency knowledge.

Australia has one of the world's longest-running mandatory energy labelling schemes. The Energy Rating Label has been present on household appliances for over 30 years under the Greenhouse and Energy Minimum Standards (GEMS) scheme and is widely recognised by consumers. Most Australians are familiar with the label and understand that more stars generally mean lower running costs. Despite that knowledge, upfront price remains the primary driver of purchasing decisions for household appliances, rather than lifetime savings. This creates a persistent energy-efficiency gap that government action can help address.

The stakes are high: household appliances account for a large share of residential electricity consumption, and an inefficient purchase locks a household into higher bills for a decade or more. Energy labels still have value, but information alone cannot overcome affordability constraints. The next phase of Australian energy policy needs to shift from awareness-raising to affordability – without sacrificing the information architecture built over three decades.

Opportunities for government action include financing and rebates that can help close this gap by reducing the upfront cost of efficient appliances; ensuring energy labels are visible in digital retail spaces, so consumers see the same information when shopping online; and providing practical tools like lifetime appliance cost calculators that can help turn label recognition into simple cost comparisons. These steps will support a leap between information and action.

Recognised but not fully utilised: Australia's Energy Rating Label

Australia’s Energy Rating Label is a policy success. It provides consumers with a simple, standard way to compare the running costs of major appliances at the point of sale. But knowing the label is not the same as being able to use it: research distinguishes between declarative energy knowledge (knowing, in the general sense, what energy consumption means) and procedural energy knowledge (the ability to calculate and compare lifetime running costs). Australian consumers are doing well on the former, only moderately on the latter: they know the star rating matters, but fewer can translate the kilowatt-hour figure on the sticker into a dollar figure they can weigh against the sticker price.

Addressing the affordability barrier to energy efficiency

Evidence suggests that consumer knowledge of energy efficiency does not always translate into purchasing energy efficient appliances, especially when upfront costs limit purchase options. Households buying a major appliance often cite price as the main factor, with energy efficiency receiving little or no consideration. This aligns with a systematic review across multiple national contexts, which finds that purchase price is the most cited barrier to adopting efficient options and can trump energy literacy even among well-informed consumers.

Those with the highest relative energy costs – and thus the greatest incentive to switch – are often the least able to absorb a higher purchase price today. Existing relief measures, such as electricity bill rebates, ease short-term bill stress but do not remove the upfront barrier that keeps an inefficient appliance in the home for another decade. This pattern is supported by present-bias research on household energy decisions: consumers overweight the immediate purchase price relative to savings that only materialise over time.

Policy implications for Australia

If policy is to close this gap, it needs to move beyond helping consumers understand energy information to helping them act on it. Three priorities for government action emerge.

First, make efficient appliances affordable at the point of purchase. A national rebate scheme or interest-free financing for low- and middle-income households could make appliance upgrades more affordable and directly address the real barrier: upfront cost, not lack of awareness. This could, for example, build on NSW rebate scheme for washing machines and Victoria’s Energy Upgrades discounts. The GEMS Act’s Minimum Energy Performance Standards cover a wide range of products, but they do not reduce a household’s upfront bill. This could be done by offering targeted point-of-sale rebates or interest-free loans to eligible households, building upon existing concession or energy assistance programmes.

Second, digitalise retail. As appliance shopping moves online, more purchases will never encounter a rating that exists only on a sticker in the store. Compulsory display of the Energy Rating Label and estimated annual running costs on digital platforms would help fill an information gap that is set to widen. This could be done by extending existing Energy Rating Label requirements to Australian-based online retailers, so that star ratings and estimated annual running costs are displayed alongside appliance listings.

Third, invest in both procedural and declarative energy literacy. Simple tools, such as lifetime running cost calculators and standardised cost-per-year figures alongside the star rating, would help households translate a rating they already know into a figure they can compare with the price tag. This is a low-cost complement to the building-code tightening already underway through the 2022 National Construction Code update, which tackles household energy performance but not appliance affordability directly.

After thirty years, the Energy Rating Label has given Australia something valuable: an audience that recognises energy information and broadly understands what it means. That accomplishment should be preserved, not thrown away. But the research points to a clear next step. The challenge for energy efficiency in Australia is no longer about putting information in front of consumers but about ensuring they can afford to act on it. Information was the starting point. Affordability and usable literacy will enable Australian households to finally act on what they already know.

Unyapan Thongpanchang is a Master of Engineering Management graduate from the University of Technology Sydney. Her graduate research examined how energy literacy influences household appliance purchasing decisions in Australia.

Dr Bahareh Berenjforoush Azar is Lecturer in the Faculty of Engineering and Information Technology at the University of Technology Sydney. Her interdisciplinary research focuses on equitable energy transitions, energy policy, and sustainable resource management.

Dr Sancheeta Pugalia is Lecturer in the Faculty of Engineering and Information Technology at the University of Technology Sydney. Her research focuses on innovation systems, digital technologies, and socioeconomic resilience, with a particular emphasis on gendered entrepreneurship.

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