Reactions to NSW's mandatory energy efficiency push; ministers sit on cost-benefit study

20 Jun 2008Archived News Energetics in the News

Published: Carbon + Environment Daily - Anna Reynolds, Principal Consultant; Carbon Markets and Government Policy, Energetics Pty Ltd receives a response to her Reaction of Energetics to the new NSW Action Plan for Energy Efficiency


The NSW government's energy efficiency action plan is "a really important affirmation" of the importance of complementing emissions trading with energy efficiency policy measures, according to Anna Reynolds, carbon markets and government policy principal consultant with Energetics.

But there will be issues requiring careful consideration in working out exactly how to make it mandatory for large energy users to implement cost-effective projects that they have previously identified in their energy savings actions plans, Reynolds said.

Meanwhile, Australia's energy ministers have so far declined to release a cost-benefit analysis of "program options" to make it mandatory for industry to implement energy efficiency measures that have a payback of three years or less.

The cost-benefit analysis is mentioned in the communiqué from last Friday's meeting of the Ministerial Council on Energy (see related article).

CE Daily has sought a copy of the cost-benefit analysis but has been advised it is not yet publicly available. A source has told CE Daily some jurisdictions have reservations about aspects of the analysis.

Changing circumstances

While warmly welcoming all elements of the NSW energy efficiency package, Energetics' Anna Reynolds said there would be "challenges" in making it mandatory for large energy users to implement cost-effective energy efficiency projects.

Most of the energy savings actions plans prepared by large energy users are now two years old and companies could have undergone substantial changes since they were completed, Reynolds said.

As well, there have been suggestions that up to a third of the sites that should have been scheduled under the 2005 order that introduced the requirement to report were never actually scheduled, she said.

Reynolds acknowledged that it wasn't ideal "to have a whole heap of state schemes" on energy efficiency and said they should ultimately be "rolled up" into a single, national approach. But state governments had seen that energy efficiency was a key concern that isn't yet being tackled effectively at the federal level, she said.

The NSW move sent a positive message that energy efficiency policy is a key component of the response to climate change and it was welcome at a time when it would have been "tempting for some policy makers to sit on their hands" and wait for emissions trading, Reynolds said.


However, others were highly critical of the timing. Tony Wilkins – who is spearheading News Ltd's efforts in Australia to improve the energy efficiency of the media giant's operations – said the introduction of another state-based scheme that will add to the energy reporting burden is particularly "disappointing", given that the business is anxiously awaiting the imminent release of regulations for the national greenhouse and energy reporting scheme.

Depending on the detail of the NSW scheme, it could lead to perverse situations where a company could be obliged to implement energy-savings measures at a site it plans to move from in three to four years, said Wilkins, News Ltd's environment manager. And there could be conflicts with, for example, heritage laws if the new obligation required installation of double-glazed windows in a heritage-listed building.

Meanwhile, Anny Joseph, sustainability policy adviser with the NSW Business Chamber, has expressed concern that the mandatory move has coincided with a redirection of a substantial slab of funds away from grant programs for industry energy efficiency projects and towards household energy efficiency schemes.

Joseph, who used to work with the NSW government department administering the energy savings action plans scheme, told CE Daily the reconfiguration of the energy and water savings funds into the Climate Change Fund had resulted in a large boost to household energy efficiency grant schemes and plummeting funding for business energy efficiency projects.

While not commenting on the specifics of the NSW funds, Energetics' Reynolds said more funding generally needs to be made available for business energy efficiency projects, as this is where many of the big improvements can be made.

Directing a portion of auction permit revenue towards energy efficiency would be one way the Federal Government could supplement existing funding levels, Reynolds said.

'Totally unnecessary'

Michael Hitchens, chief executive of the Australian Industry Greenhouse Network, told CE Daily the NSW move was "totally unnecessary" ahead of the introduction of emissions trading, adding that it was particularly frustrating given Australia's energy ministers last Friday called a temporary halt to investigations into a possible mandatory energy efficiency measure (see related article).

The AIGN has previously called for the phase-out of the federal Energy Efficiency Opportunities program – which mandates audits but not project implementation – once emissions trading starts (see related article).

The Australian Industry Group, while generally praising the NSW package, queried the merits of making it mandatory for large energy users to implement energy efficiency projects.

"If the emissions trading scheme is properly designed, we would question the need for this alternative pressure point on industry, particularly if it involves significant compliance costs," said Ai Group NSW director Mark Goodsell.

However, Environment Business Australia chief Fiona Wain said the NSW energy efficiency action plan was very welcome.

"Making the economy smarter and more efficient is absolutely the right step", particularly in light of skyrocketing oil, coal and gas prices, Wain told CE Daily.

"Not only does this help reduce greenhouse gas emissions but it will increasingly save money for households, business, and government."

Alan Pears, adjunct professor at Melbourne's RMIT University and co-director of consultancy Sustainable Solutions, said the move showed the Federal Government should act now on energy efficiency or else it would "have to pick up the mess" of a patchwork of state schemes in a few years time.

"This really adds to the challenge for the Rudd government to make up the ten years' lost ground through lack of national leadership in energy efficiency under the previous government," Pears said.

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