Victoria voluntarily heads backwards on energy smarts

The Victorian government says it will replace its energy efficiency scheme with decent alternatives. Sadly, its voluntary home energy-rating policy is doomed to mediocrity.

When the Napthine Victorian Government announced its intention to scrap the Victorian Energy Efficiency Target, which provides incentives for the rollout of energy efficient products and services, it said it would announce other substantive energy efficiency measures to replace it.

Given the legislation to scrap the scheme is due to be voted on in the lower house next week, Climate Spectator followed up this commitment for new measures with Energy Minister Russell Northe.

A spokesperson informed Climate Spectator that one of the key measures will be the ‘MyStar’ house energy rating initiative. According to the spokesperson:

For the first time in Victoria the Victorian Government will pilot a government-approved 10 star scorecard to inform Victorians of the current energy efficiency status of their homes and empower them to improve their energy performance with incremental measures.

The star scorecard will deliver a valid 10 star energy rating which estimates the average cost of energy for key features of a house, including a rating of performance in hot weather. The star scorecard will include suggestions for a range of improvements that householders can undertake to increase their home’s star energy rating.

According to the spokesperson this is a superior scheme to VEET because it will be an entirely voluntary initiative. Climate Spectator was informed that householders and landlords will apparently seek to obtain these ratings in order to increase the sale price or rental fee they can obtain when the home is up for sale or lease. However, they will have to pay to have these ratings done and the government will not be subsidising them.

Wow, I thought, this is progress – a plan to pilot a system for rating the energy performance of our homes, it’s not like these didn’t already exist.

Then a light bulb went off in my head and I went through my files of assorted government commitments and promises which I hoard away for a rainy day just like this one. And there it was, a Ministerial Council on Energy communique dated December 2004

Inside this communique, which was signed the previous time Ian Macfarlane was the federal energy minister, it stated at one of its objectives:

ensure credible and meaningful information is publicly and readily available to potential purchasers and renters/lessees on the relative energy performance of buildings.

And to do this the national, state and territory energy ministers agreed on implementing:

Agreed method(s) for measuring building energy performance on a “like-with-like” basis with a nationally consistent legislated regime for mandatory disclosure of energy performance of residential and commercial buildings in place no later than December 2007.

So 10 years on we’re going to pilot such a scheme, and it won’t be mandatory.

This then sparked off the neurons deep in my memory banks again, so I went back through the folder labeled ‘Policies Long Forgotten’ and there it was, the Victorian Coalition’s 2010 State Election Planning policy.

In this document it states:

A Liberal Nationals Coalition Government will also work towards ensuring that all existing homes meet an average 5 star energy rating, as soon as possible.

Apparently, we are supposed to believe that a pilot of a voluntary labeling scheme will achieve a 5-star standard in existing buildings, which took a mandatory requirement to achieve in newly constructed homes – even though they can more easily meet such a standard.

To understand whether this voluntary labeling scheme might deliver on the Coalition’s election commitment (ignoring the “as soon as possible” bit), it might be helpful to revisit what happened to the 2004 Ministerial Council of Energy initiative.

Real estate agents, are what happened to it – they killed it.

Now, you might think that a $100 to $200 fee to ensure buyers were properly informed about the relative energy efficiency of all homes was chicken feed compared to things like stamp duty of around $20,000 on the average home; and would be made-back with interest on the first week’s rental payment. But the real estate lobby thought this would be a major impost and deterrent to people wanting to sell or rent their homes.

Yes, it was complete lunacy, but never doubt the stupidity of an industry lobby trying to justify its membership fees, or a leadership driven by ideology.

Of course, the more subtle underlying reason for their resistance may have been that once owners and landlords starting receiving appalling 1-star ratings for their properties they might have felt compelled to pull their property from the market and spend maybe a thousand dollars addressing the fact their property was freezing in winter, boiling in summer and cost a bomb in energy bills.

Yes, this might have slowed the market in real estate a little. But overall the economy would be better off because we’d waste less money on energy. Also, it would have been good for equity as it is often the most disadvantaged that rent homes with appalling energy performance. 

One of the interesting and unexpected things learnt from Australia’s highly successful and mandatory appliance energy star rating label is not so much that it drove people to buy the highly rated appliances in their droves; rather it was that manufacturers decided to do relatively inexpensive or no-cost things to convert their highly inefficient 1-star appliances to 3-star appliances. Manufacturers came to realise there were competing products at the same price point that performed better, and they didn’t want to be the laggard.

So energy rating labels can work well not so much because consumers seek excellence, but because suppliers are keen to avoid mediocrity.

But alas, because the energy ratings will be voluntary, we’ll only ever learn about the very small number of properties that perform really well, not the far more numerous properties that perform poorly. And, therefore, the chances that we’ll get within cooee of “all existing homes meet an average 5-star energy rating” are Buckleys and none.