Australia: Draft Energy Efficiency Strategy

Last Updated: 9 June 2009
Article by Elisa de Wit and Rachael Webb

The Council of Australian Governments (COAG) signed the National Strategy on Energy Efficiency 2009-2020 Memorandum of Understanding (MOU) at its most recent meeting on 30 April 2009 together with a draft Strategy on Energy Efficiency (Strategy) which will be finalised by mid 2009 at COAG's next meeting.

The Strategy recognises that whilst the Carbon Pollution Reduction Scheme (CPRS) will provide an incentive for households and businesses to use energy more efficiently, a carbon price alone will not realise all the potential cost-effective opportunities to improve energy efficiency. The overarching goal of the "coordinated and ambitious" Strategy, which incorporates and builds on measures already agreed by COAG and the Ministerial Council on Energy through the National Framework on Energy Efficiency, is to maximise the implementation of cost effective energy efficiency measures across the economy. It will reduce households' and businesses' energy bills, reduce the cost of greenhouse gas abatement under the CPRS and lower the energy intensity of the Australian economy overall, strengthening the capacity for Australia to achieve more stringent targets under the CPRS over time.

The coverage of the Strategy will encompass all areas where substantial energy efficiency opportunities exist:

  • commercial buildings;
  • residential buildings;
  • appliances and equipment;
  • industry and business;
  • government;
  • transport;
  • schools and training;
  • innovation;
  • advice and education.

Transition To A Low-Carbon Future

One of the themes of the Strategy is assisting households and businesses to transition to a low carbon future. Many of the measures focus on identifying skills gaps and supporting the development of skills capacity of the energy services sector, particularly in the area of energy efficiency advice, audit and assessment. One of the key elements is to extend the Energy Efficiency Opportunities program to smaller users.

Impediments To The Uptake Of Energy Efficiency

The Strategy identifies, and proposes measures to reduce, impediments to the uptake of energy efficiency in the following areas:

  • Electricity markets – Initial consideration of the effectiveness of the electricity market in bringing forward demand-side energy efficiency measures (including peak load shifting, cost-reflective pricing, and measures to address asymmetry of information) will be through the Australian Energy Market Demand Side Participation Review, with further independent review if required. The Strategy recognises that increased information and the roll-out of advanced metering infrastructure ("smart meters") is expected to assist customers make energy-efficient consumption choices.
  • Appliances and Equipment – The Strategy embraces a range of measures including to accelerate and expand the current Minimum Energy Performance Standards and labelling program and phase out inefficient lighting products and greenhouse-intensive hot water systems.
  • Transport – Measures will focus on improving the fuel efficiency of the Australian vehicle fleet and the domestic car manufacturing industry.

Making Buildings More Efficient

Energy consumption in buildings accounts for approximately 20% of Australia's greenhouse gas emissions – split equally between commercial and residential buildings. The strategy sets the foundation for a transformation of Australia's building stock through the following measures:

  • Develop a national building energy standard setting, assessment and rating framework implemented through the Building Code of Australia (BCA), by 2011;
  • Significantly increase the stringency of all commercial buildings in the BCA starting with the 2010 version. This includes tightening the benefit to cost ratio on measures from the current 5:1 to 2:1;
  • Phase in from 2010 the mandatory disclosure of energy efficiency in commercial buildings– phase 1 applying to large office buildings of 2000m2 or larger and commercial buildings owned or leased by Commonwealth, State or Territory Governments. Phase 2 may apply to other building types including hotels, retail, schools and hospitals;
  • Implement the Heating, Ventilation and Air Conditioning High Efficiency Systems Strategy;
  • Increase the minimum energy efficiency requirements for all new residential buildings and major renovations of residential buildings in the 2010 update to the BCA to achieve a minimum 6-star rating, and include requirements for hot water systems and lighting;
  • Phase in mandatory disclosure at the time of sale or lease, commencing with energy efficiency by May 2011 and expanding to greenhouse and water performance;
  • Provide incentives for residential building owners to undertake energy efficiency improvements including the Commonwealth Energy Efficient Homes Package which has received a boost of $3.9 billion from 2009/10.

The Strategy also recognises that governments are significant users of energy and proposes measures for government to "work in partnership and lead the way". Measures include improving the performance of buildings owned or occupied by governments by the promotion of energy performance contracting to upgrade buildings; developing a National Green Lease Policy, placing greater emphasis on energy efficiency in procurement practices; and increasing the energy efficiency of street lighting including the consideration of mandatory standards and whether an incentive mechanism for distributors to install efficient equipment is needed.

The recently released Federal Budget allocates $64.6 million over 4 years to various other energy efficiency measures, including $18.3 million over 4 years for improvements to the energy efficiency labelling program and $16.4 million over 4 years to expand minimum energy performance standards for appliances and equipment, with the remainder going to measures to improve building energy efficiency that have been flagged in the Strategy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Elisa de Wit
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