Combet, Newman, O'Farrell go to water on hot water

The phasing out of inefficient electricity storage water heaters is looking more and more like an empty promise, with progress made in 2010 fizzling out to nothing.

Every year four million Australian households spend over a billion dollars per year unnecessarily to burn coal to heat up water to spin a turbine of which 70 per cent of the energy is vented as heat rather than creating electricity. This is then transmitted around 100 kilometres or more, where a further 10 per cent of the electricity is lost to then – yes, you guessed it – heat up water.

Once at the home further energy is lost as the heated water sits for several hours in a tank before being used. Once the tap is turned on the hot water is then mixed with cold water to cool it from the 60 degrees to 50 degrees before it then exits a tap.

Heating hot water via electric storage water heaters is the largest single driver of greenhouse gas emissions from households and responsible for the same emissions as a 1000 megawatt coal-fired power station. For those households unfortunate enough to have one, they account for around a third to a half of their electricity consumption. Yet the greenhouse emissions could be more than halved through use of technologies already in widespread use: gas, solar and heat pumps.

In 2007, the incoming Labor government promised to do just that by phasing out the sale of inefficient electric resistance storage water heaters, starting in 2010 where gas is reticulated and 2012 for the whole of Australia.

It’s now 2012, so what is happening?

Pretty much nothing.

In December 2010, all states and territories, except Tasmania (whose electricity is largely hydro and wind), agreed to phase out greenhouse intensive (electric) hot water systems. But the two biggest users of electric systems – Queensland and New South Wales – haven’t followed through.

While Queensland has at least required the phase out to be implemented in areas with gas reticulation, this leaves out two-thirds of households in this state. And NSW has done nothing, stating that it would still like to consult further with stakeholders. But there is little information available detailing the process or timing around this so called consultation, nor the decision making criteria and cost-benefit analysis that would be applied.

The thing is that we’ve actually already gone through this process – it’s called a regulatory impact statement (RIS). A discussion paper was issued in 2008 and then a final decision RIS in November 2010. This process involved extensive consultation and submissions. At the end of it the conclusion was that the benefits of the phase-out exceeded costs by 40 to 130 per cent and should proceed.

What is particularly disappointing is that it’s not evident the federal government has put up much of a protest about this lack of progress.

It seems that you can follow regulatory procedure to the letter, do the economic analysis to ensure the measure makes sense, give industry and the community several years notice and some pretty big rebates to soften the blow, but that doesn’t seem to count for much.

Politicians like to talk a lot about concern for consumers' rising electricity bills. But when asked to actually do something that would make a large, long-term difference, they put the interests of their government-owned electricity businesses above those of consumers.

Of course I’m sure some will try to paint this as being driven by a deep concern for the interests of the poor, who might find it difficult to afford a more efficient but also more expensive water heater. Yet for the vast majority of the genuinely disadvantaged it’s their landlord that pays for the water heater, while they cop the energy bill. This measure will actually save most low income households money from day one. Also the government, with the Coalition screaming in support, has spent hundreds of millions on rebates. If need be, with a fraction of the money spent on rebates, they could supply low interest loans to low income households to cover the extra cost of a more energy efficient water heater.

We are wasting a billion dollars and sending eight million tonnes of CO2 into the atmosphere every year that we don’t have to. It’s time NSW, Queensland and the federal government pulled their fingers out and followed through on a phase-out of high-polluting electricity storage water heaters.