Australia lags the developed world in its energy efficiency performance. This is a product not only of low energy prices but also government complacency. Australia’s domestic energy supplies of coal and gas are plentiful, secure and cheap. Unlike Japan or Europe we are not reliant on others for our energy needs. The concept of being held hostage to another country for our energy supplies is not something we have had to worry about. While we might be exposed to volatility in oil supplies, this has not been a major economic concern because our energy exports also benefit when oil prices rise.

In combination these factors have created a spirit of complacency in Australian governments that energy efficiency doesn’t matter. But the coming carbon constraint will bring a significant jolt. Australia has an abundance of low carbon fuels but they will cost more than the carbon intensive fuels we have become accustomed to. No one likes rising prices, but the alternative of unmitigated climate change is far worse. This is where energy efficiency policy becomes so important. Strong energy efficiency policies can serve as a lubricant that will ease us along the path towards lower carbon energy supplies. By taking the sting out of higher electricity prices, energy efficiency will enable us to implement tighter emission caps with much less political and economic difficulties.

Right now there is no shortage of energy efficiency policies and programs at both Federal and State levels. The problem is not with the number of programs and policies, so much as how they work together to deliver an overall outcome that effectively and comprehensively taps the potential economic and environmental benefits available from energy efficiency.

Back in 2005 the International Energy Agency in its review of Australia’s energy market and policies recommended that the Australian Government:

Develop a co-ordinated energy efficiency strategy that aims to realise all the benefits of improved efficiency such as emissions mitigation, increased productivity and hence competitiveness, the advantages of delaying infrastructure investments to gain technology advancements, and enhanced energy security. Consider targets for improved energy efficiency on a national or sector specific basis and the appropriate means of achieving them. Address means of curbing peak electricity demand, for example through more cost-reflective pricing in meeting summer peaks and/or more stringent efficiency standards for peak energy consumers such as air-conditioning. Consolidate the different levels of energy efficiency programs to simplify them for users and/or improve their effectiveness. Unfortunately these recommendations were never properly followed through, in spite of the joint State and Federal Government National Framework on Energy Efficiency (NFEE) process. While some valuable work was undertaken through NFEE, the process was hamstrung by a combination of inter-jurisdictional disputes and rivalries, a lack of senior ministerial interest, and active resistance from vested interests and sections of the bureaucracy. With the election of a new government at a federal level we now have a new opportunity to make progress. The Labor Party made a number of important and innovative election commitments in the area of energy efficiency, from low interest loans to rebates and upgraded efficiency regulatory standards. Yet the most important announcement came on election eve when Labor committed to a national energy efficiency goal that “will put Australia on track to being at the forefront of Organisation for Economic Co-Operation and Development (OECD) energy efficiency improvement.”

This announcement provides the overarching target that is an essential part of a long-term energy efficiency strategy that should integrate and consolidate all the existing programs and policies and augment them where gaps exist. Dealing with the behavioural and institutional barriers to energy efficiency is complicated and messy. It is unrealistic to think it can be resolved with a single policy measure, but this cannot account for an assorted range of ad hoc, overlapping and disjointed energy efficiency policies and programs. Energy efficiency policies and programs need to be guided by an overarching target and a program for measurement and reporting against the target to inject accountability and direction.

The Clean Energy Council believes that the first step should be to convert this goal of “being at the forefront of OECD energy efficiency improvement” into a numerical target that can be measured. This target should be informed by a detailed assessment of the technological opportunities available in Australia to cost-effectively reduce energy wastage across all sectors of the economy. From there a strategy needs to be developed that will detail the policies and programs required to drive the uptake of these technological improvements and achieve the target.

This strategy must extend and expand its policy tool repertoire from what we’ve seen to date. Regulatory standards on buildings, appliances and equipment need to take a step up from the objective of just removing worst practice. The move to drive technological switching from standard incandescents to compact fluorescents provides a good example of where regulatory standards need to go in this area. In addition, it is imperative that we start to address the energy use and misuse of the vast majority of buildings that already exist and will continue to exist for many decades to come, rather than be reliant on building standards that apply only to new buildings.

However regulatory standards cannot do the job alone. Standards are extraordinarily effective but they are blunt, often far too slow in coming, and prone to strong political resistance. This means they need to be complemented with a broad-based financial assistance program that will provide support according to the implied greenhouse abatement and avoided peak demand benefits that a particular energy efficient product or service provides. This financial assistance program could wrap up the existing variety of rebates and grants available and convert them into a consolidated fund that would be open to any product or service that could demonstrate greenhouse and/or peak demand benefits. This should cover not only improvements in the residential sector, but also commercial and possibly also industrial. The program could work according to pre-set qualification benchmarks for generic goods like lighting equipment and refrigerators as well as tendering for more site-specific and customized pieces of equipment and installations.

For the financial assistance program to be effective in driving lasting change and investment it must be long-term and secure. Rebate programs running on three year budgets that are under threat each year by the expenditure review committee are a recipe for a boom-bust industry. It means businesses will lack the confidence to invest long term in human and physical capital essential to reduced costs and improved capabilities and products.

Lastly, we urgently need a concerted, national marketing and education campaign that will build understanding of and desire for improved energy efficiency. The first cab off the rank must be a building energy efficiency rating label that is visable and well promoted. The brand must be obvious to all who enter or pass by a building, not just those that end-up signing a tenancy or purchase agreement. Social status is one of the most powerful drivers of human behaviour – far stronger than monetary motives. It should be applied productively to address the most pressing problem facing humanity.

The Clean Energy Council, in conjunction with its members, intends to actively work with the new Federal Government to see an energy efficiency strategy in place that will ‘put Australia at the forefront of OECD energy efficiency improvement’.