Australia ignores energy efficiency, burns money

Energy efficiency is globally seen as the biggest and best option for cheaply reducing greenhouse gas

emissions and dealing with rising power bills. But in Australia it still struggles for recognition and funding. To

put it mildly, this is a bizarre situation. We are throwing money at the wrong end of the system – energy

supply – and locking-in increased greenhouse gas emissions.

A recent International Energy Agency study of public spending on energy efficiency in 2010 put Australia last

in a sample of 18, including developed countries.

In 2004-05, $1 billion was spent on Australian energy research and development. Of that, only $35 million

was spent on energy efficiency. Energy supply companies tell us they will have to spend $100 billion over the

next decade upgrading and expanding energy supply infrastructure. But in other countries, energy efficiency

investment is avoiding the need for such large investments. The reality is that an energy efficient Australia

could use less than half as much electricity, and quite a lot less gas than it does now. And it would save

money. So why arenʼt we doing this?

Whoʼs afraid of energy efficiency?

There are some powerful forces blocking progress on energy efficiency. The rules of the energy markets

were written by, and for, large, centralized energy suppliers.

Energy efficiency, demand management and distributed generation are natural competitors for energy

networks. But they have to compete and negotiate with networks that have monopoly power.

Powerful financial signals, cultural forces and strategic agenda drive energy policy makers, networks and

energy regulators to shut out energy efficiency from “the main game”.

Last year, in its submission to the Prime Ministerʼs Energy Efficiency Task Force, International Power

(owners of our dirtiest brown coal power station, as well as other electricity supply assets) made it plain.

They would oppose energy efficiency measures because they destroy the value of their assets.

Why? Because the rule makers set up the market so this would be the case. We have the wrong energy

market rules.

We now have multi-billion dollar businesses set up to comply with the wrong market rules: so they donʼt want

them changed – or at least, not too quickly.

The solution is simple. The government should tell energy generators, retailers and network owners that it

will continue to ramp up financial pressure until they are spending a reasonable proportion of their money on

reducing demand, consistent with international best practice.