Government axes “cost-effective” Energy Efficiency Opportunities Program
14 May 2014
By Cameron Jewell
14 May 2014 — In amidst a budget of shocks and shockers, the government has slipped through a decision to axe the successful Energy Efficiency Opportunities Program, which acts to raise industry’s awareness of energy efficiency savings and has been responsible for at least 40 per cent of industrial energy efficiency improvements since the program began – with associated net financial benefits of $808 million a year.
In an email today [Wednesday] sent out to stakeholders and obtained by The Fifth Estate, Catherine Zerger, manager Energy Efficiency Opportunities – Operations, said the program would close with effect from 29 June 2014.
“In line with the Government’s commitment to reduce costs for business and its deregulation agenda, it has announced its intention to repeal the Energy Efficiency Opportunities Act 2006 from 29 June 2014,” Ms Zerger said.
“Should the repeal Bill pass after this date, it will be applied retrospectively to remove compliance obligations for corporations with effect from 29 June 2014.”
The EEO commenced in Australia under the Howard government in 2006, with the program designed to fix a market failure relating to the availability and use of energy efficiency information.
A program review released in mid-2013 conducted by ACIL Tasman found that, using a conservative estimate, the program had been responsible for 40 per cent of the energy efficiency improvements the Australian industrial sector had enjoyed since its introduction. This had resulted in net financial savings of $808 million and a reduction in greenhouse gas emissions of 8.21 megatonnes of carbon dioxide equivalent directly attributable to the program.
Energy efficiency understanding, focus and management had improved in most corporations since the EEO Program commenced, the report found, as well as a reduction in nearly all barriers to the uptake of cost effective energy efficiency opportunities between 2005 and 2012. Barriers related to information, skills and organisational practices – all targeted by the EEO Program – were reported to have been significantly reduced.
“These changes were due to a combination of drivers including: external factors, such as rising energy costs and market conditions; the inroduction of a carbon price, corporations’ own initiatives; and not least complying with the EEO Program,” the report stated.
“Overall the EEO Program provided a mechanism for corporations to formally address energy efficiency within their business. Eighty seven per cent of respondents reported that the EEO Assessment Framework supported changes in energy management to some degree, particularly in data analysis, opportunity identification and decision-making.”
The report found the program was cost effective and recommended the government completed the second full EEO Program cycle.
“Our conservative estimate of the ratio of industry’s cumulative benefit to cumulative cost attributable to the EEO Program is 3.67, net of implementation and compliance costs,” the report stated.
An industry source told The Fifth Estate the program’s axing was extremely shortsighted.
“Howard – hardly known as a ‘greenie’ – introduced a program that has helped companies save millions of tonnes of CO2 – and dollars – and then his successor decides to scrap it on the grounds that it would reduce compliance costs,” he said. “Not even Labor was that short sighted.”
Big companies were making huge savings
An example of a large company that has benefited from the EEO is Arrium, a steelmaker whose EEO report shows the large benefits energy efficiency can bring.
“Since commencement of the EEO program in FY07, Arrium has assessed 340 opportunities and reported implementing 118 projects resulting in a total energy reduction of 4.16 petajoules a year, equating to 508 kilotonnes of carbon dioxide equivalent a year. A further 0.88 PJ/yr is expected to be saved through projects committed for future implementation, with an additional 2.17 PJ/yr remaining under investigation.”
All actions were cost-effective, with the report mentioning another 5.19 PJ/yr assigned a status of not to be implemented due to not proving economically viable.