Give industry tax offsets for energy efficiency commitments, says Energetics chief

01 May 2011Archived News Energetics in the News

PUBLISHED: Carbon & Environment Daily. Businesses should receive tax offsets in exchange for energy efficiency commitments, according to Energetics chief Jon Jutsen, who also mapped out a possible Energy Efficiency Opportunities (EEO) scheme exit strategy for large energy users.

The tax offsets could potentially – though not necessarily - be provided in the form of partial relief from liability under a carbon price regime, he said.

Jutsen made the call as an alliance of welfare and climate groups separately urged that a portion of carbon price revenue be used to support energy efficiency and affordability programs in the nation's poorest households (see below).

Tax offset schemes a proven success

Jutsen told CE Daily that schemes in Denmark, Sweden and Germany providing companies with tax offsets had proven extremely effective and had been widely praised.

"The Europeans tell us it's working very well," he said.

The schemes require businesses seeking the tax offsets to voluntarily commit to continuous energy efficiency improvements and to set and report efficiency targets, Jutsen said.

The commitments could in part require compliance with the ISO 50001 energy management standard, which is currently in draft form, he said.

Jutsen added that the EEO scheme could be amended to allow large energy users that have successfully met their obligations in its first five-year cycle to transition out of the program on condition that they made similar commitments to comply with ISO 50001 and set targets.

Jutsen also said Australia's performance on cogeneration was woeful, compared to other advanced economies.

"Of the developed, non-nuclear countries, we are the lowest user of cogeneration in the world," he said.

Why the '$50 bills' aren't picked up

Jutsen, who also supports calls for a national energy efficiency target, said Treasury seemed to have the mistaken idea that "large users are right on top of" energy efficiency and need neither new incentives nor additional obligations.

The idea that businesses will always pick up the widely-touted '$50 notes' that are ripe for the taking through energy efficiency initiatives ignores the fact that businesses are often focused on maximising production to take advantage of growing demand for their commodities or good, he said.

"If there are $1,000 notes next to them, then why are [they] going to pick up $50s?"

Dual-track efficiency strategy

Meanwhile, a coalition of welfare, union and climate action advocacy groups today called for a dual-track process to improve energy efficiency, involving use of some of the carbon price revenue and a national energy savings initiative.

One track would involve a fast-start roll-out of energy efficiency and affordability programs to assist the nation's poorest and most at-risk households, which would be funded through carbon price revenue.

This program could be gradually expanded to reach up to 500,000 homes by 2020.

The other track would be a National Energy Savings Initiative with a broader reach, which would place obligations on electricity and gas retailers to support energy efficiency activities in businesses and households.

Organisations in the alliance advocating the dual-track process include the ACTU, the Clean Energy Council, the Energy Efficiency Council and the Climate Institute.

Time needed for detailed design

Climate Institute deputy CEO Erwin Jackson noted that state governments, retailers and welfare groups have traditionally run various energy efficiency and affordability programs targeting high-risk households.

An arrangement involving rationalisation of existing programs and federal 'carbon price' funding – but with delivery still resting with these entities – would ensure that "those most vulnerable" were assisted by those best equipped to help, he said.

This component – targeting the nation's poorest households – would not require an obligation on energy retailers, he said.

However, the proposal for a National Energy Savings Initiative with a broader reach – which picks up on a recommendation of the Prime Minister's task group on energy efficiency (see related article) – would involve mandatory obligations on retailers to support energy efficiency activities, he said.

Jackson said the groups were not calling for the Government to "jump in boots and all straight away" on the national energy savings initiative.

"What we are asking them to do is to make a commitment to this as part of the pollution pricing package," he said.

Detailed modelling and design work on the initiative should also be conducted during this term of Government, he said.

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