The usage of residential electrical appliances for the last two decades has increased rapidly in Malaysia together with the increasing income per capita. Like other developing countries with hot and humid climates, Malaysia has been experiencing dramatic growth in the number of use of air conditioners, and the usage will be higher in the future. In order to reduce energy consumption in the residential sector, the Department of Electricity and Gas Supply considers implementing energy labels for room air conditioners sometime in the coming year. This study attempts to calculate the economical and environmental impact of implementing this program in Malaysia. The study found the savings has exceeded the investment cost and the program has reduced the emissions caused by burning fossil fuel.