The National Energy Savings Initiative Working Groupą
(Working Group) released an Issues Paper (the Paper) on 20 December
2011 seeking input on the policy objectives, principles, major
design elements, coverage and focus of efficiency savings for a
National Energy Savings Initiative. The Paper seeks feedback on 107
separate questions. To assist in the design parameters, a Modelling
Assumptions Report has also been released.
The Working Group will hold consultative workshops in capital
cities in the coming two weeks, details of these are available on
DCCEE's website with the first workshop in Brisbane on 31
January 2012 (see link at the end of this article).
The Paper sets out the main areas on which the Working Group is
seeking stakeholder feedback.
Drivers for change
The Working Group recognises that:
there is considerable scope for energy efficiencies in all
sectors of the community
efficiencies are not being realised even where the savings are
electricity costs are rising steeply (up 19% on average from
2011/2012 to 2012/2013) and without a reduction in energy use some
sectors of society will be significantly disadvantaged
network costs, in particular, are rising steeply due to high
demand in peak periods and the need to replace ageing assets
there are over 300 separate individual energy efficiency
measures across different levels of government
replacing three state based schemes with a single national
scheme should reduce compliance costs.
The Working Group indicates support for an energy efficiency
obligation scheme over direct regulation as this results in
least-cost energy efficiency. Energy efficiency or 'white
certificate' schemes are in place in New South Wales, Victoria
and South Australia as well as in the UK, France, Belgium, Denmark,
India, Italy and in 26 states of the US.
The Working Group recognises that setting the correct objectives
impacts on scheme design. For example if the primary objective is
to reduce energy costs, activities which reduce peak demand would
be favoured recognising that 25% of retail electricity costs are
derived from peak events occurring less than 40 hours per year. If
the objective is to reduce emissions, switching from electricity to
gas appliances would be favoured. If saving energy for low income
households is the primary objective then the scheme would focus on
activities in those households rather than in commercial
Major design elements
The Working Group favours a baseline and credit scheme (examples
being the current energy efficiency schemes in Australia) over a
cap and trade (an example being the carbon pricing mechanism post 1
July 2015) and states that a scheme which allows the trading of
certificates can assist parties meet their obligations for a lower
Sectoral and fuel coverage
The Working Group indicates a commitment to cover activities in
residential, commercial and industrial sectors. It states that
covering both electricity and gas would reduce the scheme costs but
would add complexity and could increase administration and
participation costs thus increasing energy prices in comparison
with an electricity only scheme.
The current energy efficiency schemes in Australia impose
liability on electricity and gas retailers. The Working Group ask
whether distributors would be better placed as the obligation point
as they benefit directly from improvements in efficiencies and
could for that reason be better placed to target activities. On the
other hand as distributors are in a monopoly position receiving
regulated prices there is no scope for competitive pressures to
minimise compliance costs.
Making a submission
Submissions on both the scheme design for a National Energy
Savings Initiative and the Modelling Assumptions Report are sought
by 4pm AEST on 17 February 2012. Details are available on the
1 The Working Group comprises senior officials
from the Department of Climate Change and Energy Efficiency and the
Department of Resources, Energy and Tourism.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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