Why does the EU restrict the maximum power drawn by various consumer electronics instead of taxing them higher?

Question

According to this article, EU restrictions related to various appliances will go into effect on 2023.03.01. If nothing changes, most high-end TV cannot be sold in the EU:

If nothing changes between now and then, there won’t be a single 8K TV that can be sold in the EU. The rule also will affect a couple of 4K OLED TVs, 65-inch QD-OLED TVs, and at least one high-performance 4K QLED TV.

The article provides more details and critiques how the EU computes the figures for such restrictions.

I am wondering about the rationale of such a policy which might create various problems (e.g. producers cannot sell some products, make quality compromises to meet the restrictions, and higher production costs) and not consider alternatives like higher taxation. Examples:

• higher tax for products with power consumption above some thresholds
• higher prices of electricity based on various consumption thresholds

Theoretically, higher taxation instead of restriction means no unhappy customers due to not being able to buy some stuff and higher income for the states. So, it is not clear for me why restriction instead of taxation.

TimesOfIndia provides more details about the expected maximum power and the actual power required by some 8K TVs:

(..) the EU wants 75-inch 8K TVs to consume 141 watts...Samsung 75-inch 8K TVs reportedly consume at least 303 watts... similar LG models consume 219 watts ... TVs from TCL consume 356 watts.

Note: While Why do governments encourage saving resources instead of simply raising the price on them? is similar, there are two main differences:

• I am asking about the EU, not individual governments
• I am mentioning taxation on energy-inefficient products as opposed to resource taxation

Answer 1

Because the EU's intention is that TVs actually consume less energy, not that people simply pay more for waste, or that states collect more taxes.

If the rich can afford to pay more, it can easily be invested in technological development that improves efficiency.

Also I suspect one low-tech solution the rich could have to large and dim screens, would be to simply fit and use blackout curtains when viewing them, rather than expecting the screens to function in daylight.

This is the reason why cinemas are dimly lit environments when the film is playing, because projector technology has always limited how bright the viewing screen can be.

If the inefficiency of larger and finer screens cannot be overcome by technological means, then the intention is probably also to limit screen sizes and resolutions to a sensible maximum, implied by the power consumption limits.

The assumption that consumers will be less happy due to these restrictions is I'm afraid an unproven suggestion. I enjoyed television and film just as much at PAL resolutions on a 14 inch screen.

Answer 2

Tax is a matter for national governments not for the European Union.

There are some attempts at harmonisation of fiscal policy across the Eurozone, but details of tax, such as a sin tax on big TVs, is firmly a matter for the national government.

So the reason that the EU isn't taxing TVs is simple The EU doesn't tax anything!. Tax is simply not an option for the EU.

Answer 3

Because limits are the only 99% certain way to actually cause manufacturers to innovate and use more energy efficient technology.

Consider for example what has happened with vacuum cleaners. I have a vacuum cleaner bought in 2011, that has nominal power of 2000 watts and maximum power of 2200 watts. Today, that would be illegal in EU.

On the other hand, a typical cordless vacuum cleaner maybe has a 60 watt-hour battery.

Let's calculate how many minutes a cordless vacuum cleaner would run if it was impossible to build a good vacuum cleaner with less than 2000 watt power usage.

60 watt-hours / 2000 watts = 0.03 hours = 1.8 minutes

So, that's it. With a cordless vacuum cleaner, you would be able to use it for 1.8 minutes if it was using 2000 watts of power and had a typically sized 60 watt-hour battery.

What EU recognised is that vacuum cleaners had ridiculously high power usage. They recognised that it's possible to build a reasonable vacuum cleaner, with good enough suction, using 500 watts as opposed to using 2000 watts. So, in other words, what was available in the marketplace in 2011 was terribly inefficient.

The same is true with televisions. A 75-inch (16:9) TV has a surface area of 1.55 square meters. At a reasonable brightness of 250 candelas per square meter, that's 388 candelas. Lambert's cosine law says that this requires 1220 lumens of luminous flux, assuming the worst case displayed picture (all white). If you disagree, turn on a 75-inch television, put the picture to white, and compare how well it lights your room compared to a 1220 lumen LED light bulb.

State of the art LEDs today are about 164 lm/watt (I used Osram P9 as an example). So, to produce 1220 lumens, you need 7.4 watts.

If Samsung's 75-inch TV consumes 303 watts, it's about 41 times less efficient than it could be.

It's true that today's televisions are inefficient, for example the light diffuser at the back wastes some light, and color filter blocks two thirds of the light. But still... 300 watts to produce 1220 lumens. That's ridiculous! In fact, a 60-watt incandescent light bulb produces 800 lumens, so Samsung's TV is more than three times less efficient than an incandescent light bulb, which is so outdated technology that today it's banned for its inefficiency.

Besides, the 7.4 watts is the worst case. If the television uses advanced technology to create light at every pixel as opposed to creating a constant background light and filtering that away at every pixel, I'd say a typical picture would use half that, 3.7 watts.

I fully agree with EU that manufacturers need pressure to reduce the power consumption of televisions.

Answer 4

To complement other good answers, another potential contributing factor is that:

A strict ban is likely simpler and cheaper to implement.

Or at least cheaper in direct costs to government and business. If you want to introduce a new tax, you need to setup the beraucracy to collect the tax and to enforce that it is paid. And this needs to be ongoing: you need to at least sometimes somewhere actually check that the number of sold/imported items matches the number on the tax declaration. It is not unheard of that the cost of collecting a tax becomes larger than the amount of money collected.

On the other hand a complete ban can quite safely be checked very few times (most likely just at certification of the appliance for the EU market, where it becomes just one more item to check among many others), since most manufacturers produce large batches of identical products. It also targets the manufacturers/certificate holders (usually few in number and big) which have more to lose and are generally easier to track than importers/resellers (many smaller companies).

EDIT: Commenters have raised the possibility that the cost of a new tax could be made negligible by introducing a new VAT bracket for offending applicances. I agree this could be one of the easiest way to do it, but it definitely is not without cost. I didn't dig deep, but immediately the first result when searching "cost of multiple vat rates" on Google Scholar is Agha & Haughton 1996 who do empirical evaluation of VAT collection and note that "compliance [to VAT] is substantially lower with multiple VAT rates" and with multiple VAT rates "Compliance costs rise as the tax forms become more complex and accounting records need to be more complete". I do not have strong opinion/data on what would happen in any specific case, but I hope this is enough to show that a non-trivial cost is at least possible.

This still does not preclude that taxation would benefit the society as a whole more, but the direct costs to government/business could IMHO plausibly at least sometime be lower for bans than for taxes. Especially in situations like this where the proposed tax is unlikely to have large total volume. If the tax was a side effect a larger framework of carbon/energy consumption taxes, the calculus could be different.

Answer 5

Taxes are supposed to discourage manufacturers indirectly, by making their products more expensive, which drives away customers. This is a very indirect mechanism which is not guaranteed to work.

Instead of innovating on the energy consumption front to avoid the higher taxes, manufacturers could try to get around this problem by reducing production costs by the amount that the taxation adds, so they arrive back at the market price.

For instance, they could lower quality, which would be bad. And others would have to follow suit, as they would be undercut.

Even worse, they could also change the product to make it LESS energy efficient (as they get taxed anyway), which could presumably be done using older, cheaper technology, with fewer patent license fees to be paid for energy-saving innovations.

In short, taxation as a steering mechanism could lower standards, increase energy consumption and stifle investment in innovation to reduce consumption.

Direct restrictions on the other hand are predictable and easy to implement.

Answer 6

Because neither governments, nor (con)federations such as EU, behave optimally and taxes are unpopular, and people do not understand that capping energy use creates implicit taxes anyway.

From a scientific perspective tax would be better policy (Nordhaus 2007).

• First rule of rational policy-making is that people respond to incentives. By selecting appropriate level of the tax energy consumption can be driven down to arbitrary low level pre-selected by the social planner.
• Taxes are superior to quantity controls as they allow for consumption to be reduced at points where the damage to welfare will be minimal, whereas quantity reductions do not have any good mechanism to achieve that.

People who claim that pollution taxes are just way to pay for pollution without reducing it are public administration equivalent of anti-vaxxers since evidence for this is at least as strong as public health evidence for use of vaccines.

However, taxes are deeply unpopular with public. Similarly to vaccines where people have fear of autism and other side effects for which there is no credible evidence, when it comes to taxes people fear that new taxes will come at their expense (which is true) whereas quantity controls are somehow free and they will not have to pay for them or if they recognize that there are costs they believe these costs are at least lower than the costs of taxes (which is blatantly false according to best available evidence and scientific consensus).

You can see it playing out in the real world. When Macron tried to impose higher price of gasoline in France, which is environmentally justified and more optimal then lets say capping the use of gasoline, France experienced bloody des gilets jaunes (yellow vests) protests. Democratic countries have to respect wishes of the electorate, regardless of whether the policy is optimal for society or not.