Friday, May 27 2022

Whether you focus on climate policy, energy market transition, social justice, health, or business competitiveness and innovation, improving energy productivity and efficiency wins.

Yet major Australian political parties and even some major clean energy industry organizations and environmental groups rarely mention it.

On the other hand, the European Union now applies the principle of “energy efficiency first”. The International Energy Agency, which employs many economists, has called energy efficiency the “first fuel” for years.

The IEA’s lower-cost net-zero carbon scenarios include energy efficiency providing emissions reductions comparable to renewables over the next two decades.

The IEA and the EU recognize that improving energy productivity offers many additional benefits beyond saving energy and reducing carbon emissions, including promoting faster and more cost-effective fuel switching. fossils by renewable energies.

Australia has consistently performed poorly in global energy efficiency comparisons. The American Council for an Energy Efficient Economy recently ranked Australia 18th out of 25 countries, with our performance in the industrial and transport sectors ranked 22nd and 23rd.

Australian companies routinely reject investments in energy productivity measures that offer ROI rates of 30% per year or more and carbon emissions reductions at a cost of minus $100 per tonne of emissions avoided.

These measures can also provide productivity gains and other business benefits through reduced capital costs, more reliable and flexible production, and improved product quality. It is economic and environmental folly to dismiss negative cost emission reductions while paying rising prices for carbon offsets!

Leading building industry organizations oppose increasing the energy performance of regulated buildings from 6 to 7 stars, on the grounds that it increases the “sticker price” and exceeds mortgage limits.

If incorporated into a mortgage, it is almost always cash flow positive for the first owner. It will provide financial, health and comfort benefits and emission reductions for all occupants over the age of 70.

There is a solution. The Australian government is prepared to underwrite the risk of first-time home buyers moving into a home with a lower down payment.

This is a much bigger risk than taking out a small increase in loans to cover the additional upfront costs of great efficiency, which actually improves the ability to repay the loan.

The failure of energy reform to improve energy efficiency is an economic, social and environmental disaster. As we transition to variable renewables and move away from gas, we need extreme energy efficiency to limit peaks and manage electricity demand.

A 7-star home needs less than one-third the amount of heat as a typical 2-star home on a cold, cloudy winter day when solar output is limited. An efficient building stays comfortable and the food in an efficient refrigerator is protected longer in the event of a power outage or if demand response measures apply.

Australia’s ‘supply-side’ culture is deeply embedded in policies and institutional structures, and not just energy. We gladly “consume” more land, water and resources. National targets for electricity and gas markets focus on reducing energy prices and not on total energy-related costs, so measures that reduce costs without necessarily reducing prices are out of reach.

While there are enthusiastic discussions of energy storage and short-term demand side management to help manage energy supply infrastructure, the focus is not on the long-term driver. demand term, energy productivity.

AEMO’s low electricity demand scenario assumes lower economic growth, the reverse of what an efficient energy productivity strategy would provide.

In a recent article comparing Australian and European Union policies on energy efficiency in buildings and appliances, I highlight the contrast between overall goals, funding levels, institutional structures and energy use. effective policy tools.

As the EU faces its challenges, its use of strong standards, energy efficiency directives, effective institutional structures, substantial funding and ongoing research to learn from experience and support improvement provides useful lessons for Australia.

But the EU must also significantly speed up implementation if it is to achieve its ambitious goals.

Australia, on the other hand, lacks independent, high-level institutions that are adequately funded and led by people who are motivated, qualified and knowledgeable about energy productivity and efficiency. Our experience in renewable energy policy could provide useful lessons.

Instead, organizations like ARENA focus on financing renewable energy, not energy efficiency and productivity. Our current government’s “tech, not tax” approach is simplistic. It focuses on a limited range of long-term technologies and supports the fossil fuel industry.

We need to encourage the implementation of global zero-carbon solutions now, using a range of policy tools. Much of our focus must be on developing and implementing programs that drive change on the ground now.

A key institutional problem in Australia is that energy efficiency policy decision-making is dominated by organizations that lack the motivation and expertise to take effective action.

For example, building energy regulation must compete for the attention of building ministers with many other issues and powerful interest groups with other agendas. Transport efficiency standards have been blocked by political and commercial forces.

Information and promotion programs are poorly supported.

For example, as we approach winter and the urgency to switch from gas heating increases, the calculator on the government’s energy rating website does not provide any information to help consumers choose reverse cycle air conditioners. the most effective.

This has been the case for months. Academic research has shown that some home builders are misusing the NatHERS building star rating system to mislead and exploit ignorant homebuyers about the efficiency of new homes that barely meet our low energy standards. of construction.

Politics has been a serious barrier to energy efficiency. Aggressive and deceptive “pink carpet” hysteria has undermined isolation support policies and programs for a decade.

None of the fatalities were caused by pink bats, although the manufacturer’s commercial model was badly damaged. Indeed, prior to this program, fire departments rightly blamed halogen spotlights for fires.

Australia’s world-leading industrial energy efficiency opportunities program was halted in 2014 despite achieving over $300 million in annual savings and reducing carbon emissions to less than $95/tonne of avoided emissions.

The shutdown was based on an Office of Regulatory Best Practices analysis that assumed an ongoing program would not save money, but would impose ongoing compliance costs on industry of $17.7 million per year. year.

And the industry was implementing energy efficiency in an optimal way! So much for evidence-based policy. This appalling situation has undermined government action ever since. It’s no surprise that Australia scored 22nd out of 25th in the ACEEE scoreboard!

On the positive side, we have some successes. The NABERS commercial building rating system is a world leader. It is one of the few building energy schemes based on actual performance rather than “design intent”.

Our appliance energy labeling program is a world leader, even though it has fallen into disuse. State-level energy retailer obligation programs that require retailers to fund consumer incentives for energy efficiency measures have had some success. Early proposals for a more economically efficient national scheme were rejected.

Recent work by groups such as the Australian Energy Productivity Alliance and the RACE for 2030 Cooperative Research Center is opening up exciting new potentials for energy productivity and efficiency improvements.

Efficient, smart, flexible and connected machinery and equipment, combined with advanced data analytics, more sophisticated financial analytics and new business models, now enable us to identify, implement and assign value to the multiple business, social and environmental benefits of energy productivity and efficiency. improvement.

It can transform our reality, accelerate and reduce the costs of transformation towards a zero-emissions economy and society while limiting the damage and trauma of global warming. It is our choice.

Alan Pears AM has worked on clean energy and climate policy for several decades. Its work spans all sectors of the economy, from practical site-level projects to program development and implementation, policy analysis and education. He is a Senior Industry Fellow at RMIT University and a Fellow at the Climate and Energy College, University of Melbourne.

This article originally appeared in John Menadue’s Public Policy Journal, Pearls and Irritations. Reproduced here with permission

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