Australians are spending “tens of billions of dollars” on energy, but state governments are talking mere tens of millions to drive the energy transition

Willow Aliento writes on The Fifth Estate website about lagging efforts in Australia to adequately address energy efficiency.

 

Australia’s missing the boat on energy efficiency

Aside from the ACT, all Australian states and territories are far behind on energy efficiency efforts, according to RMIT senior industry fellow Alan Pears.

“ACT are the stand-out state or territory,” he told The Fifth Estate.

South Australia and some of the other states are “fairly good” on renewable energy, but policy and performance on energy efficiency across every state and the Northern Territory is otherwise lacklustre.

Nationally, Australians are spending “tens of billions of dollars” on energy, but state governments are talking mere tens of millions to drive the energy transition. That’s a massive disparity in the numbers.

The National Energy Productivity Plan is also not living up to its hype. The “fanfare” was that it was going to be “leading-edge driven” Pears says.

But while its 2017 annual progress report painted everything in rosy spin-speak, a critique produced this year by the Australian Alliance for Energy Productivity (A2EP) showed that progress was slow, patchy or altogether lacking on the majority of measures.

“From the metrics it appears that energy productivity improvement in Australia has stalled in the past two years, after a promising acceleration over the previous three years,” the critique says.

“A continuation of the recent trend will make it very difficult to meet even the modest NEPP target, let alone the 2xEP target proposed by A2EP (doubling energy productivity by 2030, from a 2010 baseline).”

We must broaden the debate

One of the major issues is how efficiency opportunities are framed.

“The mistake we’ve been making is we’ve been terribly economically rational and narrow,” Pears says.

“We have to put it in a broader context and then people will value it a lot more.”

An example is the way the Regulatory Impact Statement for National Construction Code energy performance measures did not include calculations on the value of a healthy home.

When we talk about the benefits of LED lighting, Pears says, no one mentions the benefit of “fewer older males falling off ladders while changing lightbulbs”.

At a conference Pears recently attended in Vienna, there was considerable talk regarding the benefits of energy efficiency being bigger than just energy savings.

The International Energy Agency has also flagged the multiple benefits of energy efficiency in its reporting.

In Australia, when efficiency is being discussed “everyone focuses on the dollars saved”.

But this is not the carrot that works for all energy users.

Pears says he recently worked on initiatives for the commercial and industrial sector that had as a starting point establishing what the individual entity most valued.

Then energy efficiency pathways were presented as a mechanism to achieve those other desired outcomes, rather than energy efficiency being the main objective.

There’s a benefit to everyone in energy efficiency

Another issue in terms of policy and programs is that in NSW, South Australia and Victoria, the energy retailer obligation schemes that support some energy efficiency activities are actually paid for by consumers. The cost to the retailer is built into the retail price consumers pay.

The overall problem is that cost and price are “not the full story” about renewable energy or energy efficiency, he says.

There has been a lot of talk about how renewable energy reduces the wholesale energy price because renewable generation bids in at or near zero price.

But if energy efficiency programs reduce demand, which then reduces the marginal generation price, then all consumers benefit from the reduction in the wholesale price.

It is what’s called the “merit order effect”, and Pears says this effect offsets the cost of renewable energy certificates.

It’s not front and centre

Efficiency is also crucial to meeting our Paris Accord targets, which committed Australia to a cumulative reduction in greenhouse gas emissions of 900 million tonnes staged over 10 years.

“But energy efficiency is not computed by most Australian policymakers or policy thinkers,” Pears says.

He contributed a 30-page submission to the recent Finkel Review, however the final report mentioned energy efficiency only once, in recommendation 6.10.

According to Pears, it more or less said “efficiency is a lovely thing to do – and it is for the [state and territory] governments to do – not us”.

In mainstream media coverage of the South Australian blackouts, energy efficiency as part of future prevention of grid failure wasn’t mentioned. It is also rarely mentioned by many environmental groups, renewable energy advocates or the Greens, Pears says.

However, the leading consultants in the commercial solar space recommend that anyone looking to install renewable energy undertake energy efficiency measures first, and then procure a system right-sized to their efficient energy footprint.

Pears says consultants are right – but while the states are investing in renewable energy, they are not investing nearly as much in energy efficiency.

“We have a really deep cultural problem.”

It is reflected in policy, and it is also reflected in practice.

Pears notes that there are better photo opportunities for a politician standing in front of solar panels than in front of a double-glazed window.

The current appliance energy efficiency labelling review is another case in point. The scheme has been generating “enormous returns” and “we should be going harder – but we’re not”.

Legislation is also rife with loopholes, such as the one in Victoria that allows a home to have a gas hot water system installed that has less than a five-star energy performance rating so long as the home has a rainwater tank installed.

“Across every arena Australia is under-investing,” Pears says.

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