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Hunt announces more ERF methodologies for the built sector

CRCLCL chair Robert HIll

Four more methodologies for the Emissions Reduction Fund were announced last week, with household energy efficiency and industrial energy efficiency covered in two.

Environment Minister Greg Hunt used the Cooperative Research Centre for Low Carbon Living’s annual forum on Friday to announce the new ERF methodologies. Two of the four ERF activities announced were directly applicable to the built form: Aggregated Small Energy Users, and Industrial Fuel and Energy Efficiency.

“The incentives around the Energy Emissions Reduction Fund are positive in that emissions reductions will no doubt be a result,” CRCLCL chair Robert Hill said.

“For the CRC for Low Carbon Living it also offers a unique opportunity to bring the research, technology and industry it works with to work collectively to bid in this arena.

“The challenges are to engage all of industry to play a role in the new system.”

Aggregated small energy projects

This methodology will allow actions by small energy users, such as homes, to be captured and aggregated by proponents, who could include energy retailers, energy distribution networks and aggregators with access to metering or billing data. It is based largely on the NSW Energy Savings Scheme.

“The Exposure Draft Carbon Credits (Carbon Farming Initiative) Methodology (Aggregated Small Energy Users) Determination 2014 would apply to projects where goods, services and information designed to reduce greenhouse gas emissions from energy consumption were offered to a large number of small energy users,” an explanatory statement says.

“Activities that could be undertaken to reduce greenhouse gas emissions from energy consumption by small energy users under the draft Determination may include but are not limited to:

  • upgrading equipment that uses energy such as lighting, water heating, space heating and cooling, as well as appliances and whitegoods
  • changing building elements that influence energy use, including changes to the building shell such as windows and insulation
  • changing behaviour associated with energy use by, for example, changing space heating and cooling settings or limiting shower length to reduce hot water usage.”

Renewable energy systems eligible for certificates under the Renewable Energy Scheme will not be eligible for ERF funding.

The explanatory statement said that low-cost options, such as information campaigns, were “expected to be promoted”, which would benefit low and middle-income households that couldn’t afford upgrades.

The methodology uses a control and treatment group approach to estimate savings.

Removed equipment is unable to be refurbished, reused or sold to third parties, with the explanatory statement saying this is to prevent “leakage”, where emissions reductions achieved under the project are offset by reuse of the removed equipment. However, systems can be broken into component parts and recycled.

Industrial Fuel and Energy Efficiency

“This approach provides flexibility for project proponents to determine what fuel or energy efficiency activities are most appropriate for each site,” the explanatory note states.

“Projects could include replacement or modification of boilers or heating, ventilation and cooling (HVAC) systems, improving control systems and processes, waste heat capture and re-use, improving the efficiency of crushing or grinding equipment on mining sites, replacing low efficiency motors, fans and pumps with high efficiency versions, installing variable speed drives (VSDs), improving compressed air processes, and fuel switching.”

Eligible projects are those that reduce emissions by:

  • modifying existing equipment
  • changing the way existing equipment is used
  • replacing existing equipment
  • installing new equipment as part of replacing, modifying or augmenting existing equipment
  • removing existing equipment
  • changing the energy sources used by existing equipment
  • changing the mix of energy sources used by existing equipment

Project proponents would be owners or operators of large-scale energy intensive equipment. The level of abatement would be calculated by comparing emission levels before a system upgrade/replacement with emissions levels afterwards.

It will be possible to aggregate emissions reductions from multiple implementations (which may involve different activities) and multiple populations.

“This means that proponents can undertake a single energy efficiency measure or a number of measures at the same time and calculate abatement in a way that best suits their project.”

New equipment that is not to replace, modify or augment existing equipment will not be an eligible activity.

“The purpose of this exclusion is to make it clear that the methodology does not provide for calculating emissions reductions from installing new equipment in circumstances where there is no baseline data, such as ‘greenfields’ plants or substantial plant expansions.”

Renewable energy systems eligible under the RET will also not be eligible for funding.

The project activities must not reduce levels of service (for instance, tonnes of output, building temperature set points or lighting levels) unless the current level of service is inappropriate.

What is deemed inappropriate, however, is a contentious issue in the building space, particularly around temperature. For example, the Sustainable Buildings Research Centre at the University of Wollongong had to forego Green Star points around thermal comfort in order to have a wider thermal range.

Like with the aggregated small energy projects methodology, removed equipment is unable to be refurbished, reused or sold to third parties. However, the explanatory note says the Department of Environment recognises preventing the sale or reuse of some large pieces of removed equipment could limit participation.

“Stakeholder views are sought on the scale and materiality of any leakage risk that may arise as a result of allowing reuse or sale of removed equipment, and whether particular types of equipment present a greater risk.”

The exposure drafts are open for public consultation until 12 December 2014.

The Fifth Estate is seeking industry comment on the announcement. Email editorial@thefifthestate.com.au or add your thoughts in the comments section.

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