Taking the next step on energy efficiency

Energy efficiency is often described as perhaps the one sensible climate change policy that we can all agree on. And why not? Delivered well, energy efficiency saves consumers money, reduces energy demand and the need for increasing electricity infrastructure, all the while reducing greenhouse gases and acting as a benefit to the economy as a whole.

There have been a number of recent stories demonstrating the central role energy efficiency has had in helping transition Australia's inexorably increasing annual electricity demand to an actual decline over the last few years. To some real extent the reason Australia has a chance in meeting our 2020 climate change target is because of energy efficiency measures. The International Energy Agency has reported that if considered as a fuel the amount of energy saved by energy efficiency is greater than renewable, gas and even coal globally.

It's not surprising that energy efficiency is one of the few climate change related topics the G20 will consider at its Brisbane Summit. It is not contentious: it is the closest topic climate change has to motherhood and apple pie.

We need to take care, however, and not over estimate the achievements that can be made in the future. We already have minimum energy performance standards on a broad range of high energy using products and some of these have been ramped up more than once over the last decade. As standards increase, the more expensive and difficult it becomes for manufacturers to squeeze more efficiency out of a system. Manufacturers have spent hundreds of millions of dollars over the past decade in R&D and in production changes to deliver improved efficiencies. Absolutely we should ensure Australia benefits from all energy efficiency measures that are practicable, but we need to recall that there is not a unending source of cheap abatement. It is just possible that for some equipment types the low hanging fruit has been harvested and there may not be that much to take from the higher branches.

Thankfully, there is a way to increase the amount of abatement energy efficiency measures deliver. Our current approach to energy efficiency is based on the energy performance of goods – air conditioners, TVs, lights for example – at point of sale. The amount of energy efficiency estimated as a result of improving performance of these goods is the technical potential. For some items, TVs and lights for example, the technical potential is quite close to what is actually achieved. The items are purchased and mostly simply plugged in and used. The performance of these goods should be close to what was estimated at point of sale.

The same results are not true for air-conditioners and refrigeration systems which use upwards of 20% of Australia's electricity production. Their performance relates in a large way to the proficient installation and maintenance of these systems. If the systems are the appropriate size for the job, well installed and regularly maintained then the energy use is likely very close to what was indicated at point of sale. If, however, installation is botched and maintenance poor or infrequent the performance can be far less impressive than promised. Today, there is little done to ensure that the energy performance of energy using goods needing proper installation and maintenance is delivered.

Closing this gap by ensuring tradespeople meet standards for installation and maintenance will extend the effectiveness of energy efficiency measures and deliver energy and financial savings to Australian consumers. Thankfully there is a once in a generation opportunity for the federal government to consider this issue. The GEMs Act (which covers minimum energy performance standards) and the Ozone Protection and Synthetic Greenhouse Gas Management Act (which requires tradespeople working on these systems to meet certain requirements) are both being reviewed. Concurrently, the Government is developing energy policy through its White Paper process.

These are the key pieces that need to be amended in order to cover this gap in delivering energy efficiency to the community. Industry has been strong and nearly unanimous in pointing out this opportunity to the federal government. The challenge in making this reform is not technical, it is bureaucratic. The biggest hurdle is for departments and ministers to find a process that breaks down the silos of departmental and ministerial responsibility and the innate desire when reviewing legislation to look inward for small reforms and not assess how with a little imagination, political courage and a desire to genuinely address the real issues larger benefits – in emission reductions and financial savings – can be delivered. Let's encourage the government to use its imagination and start from the premise of what could deliver the best outcomes for Australia as it reviews this legislation and considers future policy settings.

Greg Picker is executive director of Refrigerants Australia and provides policy advice to the Air-Conditioning and Refrigeration Equipment Manufacturers Association.