What support can we expect to see for energy productivity policy measures in 2015?

22 Dec 2014Archived News Jonathan Jutsen Climate Change Matters

Energy productivity focuses on getting more economic value from every dollar spent on energy. It’s about maximising the multiple dividends from using energy effectively including more output and better quality. At its meeting on 11 December, the COAG Energy Council observed that ‘a concerted national focus on energy productivity can drive higher economic output, reduce energy bills for households and business, increase national competitiveness, reduce carbon emissions and improve sustainability’.  

Australia’s energy productivity is improving at half the rate of our major competitors. This problem has been compounded by rapidly increasing energy prices. In the past decade, our energy prices have been allowed to trend from among the cheapest, to the top quartile of energy prices in the world. Domestic gas prices are moving towards international price parity. Improving energy productivity is the best short-term measure to respond to high energy costs, while supply responses are being resolved.

While it was encouraging, the COAG Energy Council (previously known as the Standing Council on Energy and Resources and the Ministerial Council on Energy) communiqué took a fairly narrow view of energy productivity, with a focus on efficiency, suppliers and services. Energy productivity can be understood more broadly to include the optimisation of systems (for supply and consumption of energy) and business model transformation.

The Council announced that it would develop a new policy framework for energy productivity that would ‘seek to ensure that energy consumers (large and small) understand and can effectively manage and reduce their energy bills and are maximising the value of their energy to support a growing, competitive and sustainable economy’.

Meanwhile the Commonwealth Government continues work on its Energy White Paper, due for release in early 2015. The White Paper will “set out a coherent and integrated approach to energy policy to reduce cost pressures on households and businesses, improve Australia's international competitiveness and grow our export base and economic prosperity”. The recently published Green Paper, an interim report on progress, noted

[t]he Australian experience has been that, within large corporations over the past five years, $1 invested in improving energy productivity has delivered almost $4 in savings. In addition to cost savings, energy productivity can deliver flow-on benefits including lower maintenance and training costs, and improved quality control.

The Green Paper observed that a “national focus on energy productivity can ensure that energy needs are met in the most efficient way, looking across both the supply and the demand sides of the economy”.

The COAG Energy Council framework on energy productivity would likely address similar elements to those proposed by the Green Paper, “a comprehensive national approach to energy productivity could be achieved through a National Productivity Plan that includes:

  • increasing appliance minimum energy performance standards on a continuous improvement basis, including a focus on standby power and peak demand
  • considering more consistent national regimes for energy efficiency standards, including buildings
  • ensuring best practice information on energy management and use is widely available
  • encouraging market driven productivity through labelling and accessible information
  • rewarding innovation by recognising market leaders in energy efficient products
  • directly driving productivity by aligning with international energy efficiency standards, raising domestic standards and introducing new standards for appliances covered under the GEMS Act 2012
  • strengthening international cooperation on energy productivity to share best practice and foster technology exchange
  • improved vehicle energy efficiency.

Energetics is currently contributing to a major project of the Australian Alliance to Save Energy (A2SE). A2SE and its collaborators will develop an Australian Energy Productivity Roadmap. Due for completion in mid-2015, the project sets out to double Australia’s energy productivity by 2030.

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