Can Abbott say 'yes' to reducing energy bills?

A little noticed piece of legislation was introduced into parliament last week which is likely to make a big difference to energy bills and carbon emissions – the Greenhouse and Energy Minimum Standards Bill (GEMS).

This bill aims to move the country toward a single national system for implementing and enforcing minimum standards of energy efficiency and energy rating labels, instead of the current state-based model we currently have.

What many people may not realise is that the measures which have made the greatest impact to date on reducing Australia's energy emissions have nothing to do with renewable energy, or natural gas, or clean coal.  Instead it has been lots of little incremental improvements in the energy efficiency of mundane things like refrigerators, light-bulbs, houses, office buildings, water heaters, air-conditioners, televisions, and electric motors driven by regulated minimum standards and mandatory energy rating labels.

For example, average energy consumption of refrigerators and freezers was 40 per cent lower per unit in 2008 than in 1993, even though they had grown in capacity. While real average purchase prices declined by 20 to 50 per cent over the same period.

The chart below illustrates how thanks to standards and labelling (called the “E3 program”), Australian residential electricity consumption is expected to flatline from around 2009. The black line illustrates what was expected without the standards and labelling program, the red was what was forecast in 2008, and then the green represents electricity consumption taking into account all the measures planned under the standards and labelling program as at 2009. The program extends to products beyond the residential sector, but it is the residential sector where it has had the most discernible influence.

Total Australian residential electricity consumption with and without standards and labelling

Source: George Wilkenfeld and Associates (2009)

While electricity authorities don't publish a sufficiently detailed break-down on electricity consumption to distinguish developments by sector, the overall drop-off in electricity consumption appears to suggest this forecast is about right.

While this program has been tremendously effective, its administrative arrangements have been rather bizarre. Due to a quirk of tradition in Australia's governance, electrical safety of appliances and equipment has been managed by the states rather than federally. This is the case even though we all run off the same 50 hertz and 230-240 volts electricity specification and electrical equipment is the same across the country.  

Consequently, energy efficiency standards and labels were implemented via each state separately legislating, regulating and then enforcing these requirements. This is the case even though under the Constitution these standards had to be nationally consistent to avoid creating a restraint on cross-state trade. In fact they even have to be consistent between Australia and New Zealand to comply with our Trans-Tasman Mutual Recognition treaty.

The GEMS Bill, if it is passed by the parliament, should help to fix this unnecessary complexity which has slowed down the implementation of standards and led to inconsistent enforcement.

One hopes that Tony Abbott might expand his vocabulary from ‘no' in this particular case. After all it was under the Coalition's watch that the energy efficiency standards and labelling program started to make an impact. Minimum standards for the energy efficiency of residential and commercial buildings, refrigerators, water heaters, fluorescent tubes, air conditioners, electric motors, and transformers were put in place by the Howard Government. Indeed, thanks to Malcolm Turnbull, we started a worldwide trend in phasing out conventional incandescent light globes that create 99 times more heat than light. Sometimes I just wish we could do the same with politics.