Time to recognise energy efficiency’s big opportunities

11 August 2010

A2SE Opinion Piece

A few weeks ago many observers felt certain that an announcement was imminent on a national scheme to provide incentives for economy-wide energy savings. This was because both major parties had backed away from serious efforts to introduce a carbon price, a commitment to supporting renewable energy was now largely agreed, and a wide consultative process on energy efficiency for the Prime Minister had occurred. Beyond this, few other far-reaching policy options are left that could fit the bill as a sizeable, economically responsible stance on emissions reduction to take to the electorate.

Advocates had not contemplated one place that both parties might decide to take the emissions reduction debate in the lead up to the election... that is, nowhere. The only genuine progress has been Government’s sensible policy for tax breaks on green commercial buildings, released on a Sunday morning two weeks ago, to very little fanfare.  Both political parties still seem spooked by anything involving improved household energy efficiency, with mentions of the topic reserved only for the need to address insulation scheme-related problems.

Surveys have shown that many people feel the actions needed to save energy have probably already been taken. Indeed most energy efficiency policy seems to focus on retrofitting office buildings, or reducing household electricity use through incentives for switching lightbulbs or ‘greening up’ appliances. The focus on household and office electricity use has been important in raising the profile of energy efficiency, and it’s obvious that initiatives that have a direct impact in homes and offices will have more political cache as campaign announcements. But a bigger opportunity has been consistently overlooked because we don’t acknowledge and communicate where Australia’s energy is really being used (and wasted).

According to the Australian Bureau of Statistics Energy Account figures (4604.0), which outline where energy is used in Australia, the most recent data for 2006-7 indicates that household electricity usage accounted for only 4% of Australia’s total energy use. Electricity use in commercial buildings was even less. This is because much of the energy used by households and offices is not just electricity - gas and wood is also used for heating air and water, and fuel is used for private vehicles. 

Even with heating and car use added back in, Australia’s households account for just 12% of total energy use. ABS figures leave no doubt as to where the lion’s share of Australia’s energy is consumed – it’s in the manufacturing and mining industries, and the process of supplying electricity itself. These sectors each account for about 36% of total energy consumed. Small gains in efficiency in these sectors will therefore have proportionally much larger impacts on Australia’s competitiveness and on emission reductions.

The opportunities to reduce energy waste in industry and energy supply are abundant. The Department of Resources, Energy and Tourism recently released an in-depth report looking at opportunities identified by mining companies under its Energy Efficiency Opportunities program. While less than half of their total usage has so far been scrutinised, upstream oil and gas companies have identified cost-effective energy savings that equate to 28% of the energy use that they have so far assessed. Metal ore miners and coal miners have also identified significant savings. Overall, the 70 companies studied in the report found $233m of savings that would completely pay for themselves within two years. This is clearly the tip of the iceberg. 

The savings can mostly be achieved by implementing tried and tested techniques for process control, heat recovery, maintenance and measurement. However, experience shows that businesses are unlikely to value the social benefits of their actions without government intervention.

In the heavily regulated electricity supply sector, it’s well known that electricity generation, transmission and distribution companies work within a framework that rewards expanding energy production. Reducing energy used in conversion and in energy transportation will require new frameworks and incentive structures that recognise the potential for more efficient energy supply. This will allow utility companies to shift their business models and continue to create profit from their investment in the sector. 

Planned investments in electricity supply and new industrial capacity to 2020 runs into the hundreds of billions. Policies to ensure greater energy efficiency in these sectors bring with them the promise of improved business productivity, significant easing of pressure on the need for ongoing electricity price increases, and an easing of budget constraints. While ducking for cover on climate change measures, none of our political leaders has yet laid out a comprehensive vision to benefit households by economic transformation through improved energy productivity in these key sectors – this is a climate change policy opportunity on which there is still time to act.

The Australian Alliance to Save Energy
By bringing the best energy efficiency ideas to Australia, targeted research, strategic collaboration and direct advocacy, the Australian Alliance to Save Energy (A2SE) is engaging with public and private organisations across all sectors in Australia to build the momentum for energy efficiency action.


For more information or to arrange an interview contact:
Mark Lister, Executive Director, Australian Alliance to Save Energy
Mobile:  0402 320 906     Email: mark.lister@a2se.org.au