towards a national framework for energy efficiency— issues ... · economic and environmental...

Towards a National Framework

for Energy Efficiency—

Issues and challenges

Discussion paper

document_10 25/11/03 2:42 PM Page 2

The Development of the NationalFramework for Energy Efficiency is a jointinitiative of the Governments of:

AustraliaAustralian Capital TerritoryNew South WalesNorthern TerritoryQueenslandSouth AustraliaTasmaniaVictoriaWestern Australia

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© Energy Efficiency and GreenhouseWorking Group November 2003

ISBN 1 920825 02 9

All rights reserved. No part of thisdocument may be produced, stored in a retrieval system, photocopied or otherwise dealt with without priorwritten permission of the Energy Efficiencyand Greenhouse Working Group.

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Preface

Around the world, governments andbusiness are increasingly targeting energy efficiency as a means ofincreasing business competitiveness,saving the community money andharnessing cost-effective greenhouse gas emission reduction opportunities.

Similarly in Australia, commonwealth and state energy ministers, through the Ministerial Council on Energy, have called for a National Framework for Energy Efficiency (NationalFramework or NFEE).

The Ministerial Council on Energy (MCE)was established in June 2001 by theCouncil of Australian Governments(COAG), comprising commonwealth, state and territory ministers withresponsibility for energy policy. A key task of the Ministerial Council is toidentify policies and programs which will deliver significant improvements inenergy efficiency through coordinatedaction by federal, state and territorygovernment agencies. In November2002, MCE endorsed a proposal fordevelopment of a National Frameworkfor Energy Efficiency to define futuredirections for energy efficiency policyand programs in Australia. TheMinisterial Council has placed a highpriority on developing policies andprograms that could assist in improvingenergy efficiency in Australia.

Business has also started to call for the creation of a nationally integratedapproach to energy efficiency as ameans of better utilising public andprivate sector resources to unlock theconsiderable economic benefits energyefficiency can deliver. These calls arebased on the recognition that there is a growing need for energy and thatenergy efficiency has the potential to deliver significant net economicbenefits while generating significantreductions in greenhouse gas emissions.Put simply, there should be no net costof appropriate action on energyefficiency—but there are real costsassociated with inaction. It is alsorecognised that energy efficiency is an important means of improvinginternational economic competitivenessand ensuring that Australian products and services remain competitive in the world markets.

Through the Energy Efficiency andGreenhouse Working Group (E2G2),established under the MCE, preliminarywork has been conducted to commencethe formation of a National Frameworkand this Discussion paper seeksinformation and input from stakeholders.

There are no net costs of appropriateaction on energy efficiency—but thereare real costs of inaction.

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Purpose

The purpose of the National Framework is to achieve a step change in Australia’senergy efficiency with the objective of unlocking the significant economicpotential associated with increasedimplementation of energy efficienttechnologies and processes to deliver a least cost approach to energy provisionin Australia. Developing the NationalFramework will help identify major areasof inefficiency and areas for improvedcoordination and cooperation acrossjurisdictions in the delivery of energyefficiency policies and programs.

Scope

The National Framework will be strategicin focus and developed cooperativelywith involvement of all jurisdictions and key stakeholders, taking intoconsideration the individual circumstanceof particular regions and jurisdictions. It will focus on demand-side energyefficiency, primarily in the industrial,commercial and residential sectors.However, it will also consider energy use in energy conversion and addressintermediaries with the ability to influence energy efficiency choices, such as energy retailers, builders,financiers and appliance, equipment and material suppliers.

Inviting community discussion

This Discussion paper consists of thefollowing sections. Section 2 identifiessome reasons why Australia should seekto capitalise on the untapped economicpotential that energy efficiency candeliver. Section 3 quantifies the estimatedtechnical and economic potential forincreasing energy efficiency. Section 4provides a broad overview of efforts and achievements in increasing energyefficiency in recent years. Section 5seeks to identify some of the keybarriers to energy efficiency. Section 6presents some of the key challengesthat need to be addressed to increasethe uptake of cost-effective energyefficiency measures. Finally, Section 7outlines the next steps towardsdeveloping a National Framework on Energy Efficiency.

The principal aim of this Discussion paper is to seek the views and ideas of stakeholders in industry, governmentand the community on how to effectivelyaddress the key energy efficiencybarriers, challenges and opportunitiesoutlined in this paper.

Section 1

Introduction

The National Framework aims to unlockthe significant economic, social andenvironmental potential of increasedinvestment in energy efficiency.

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Economic, social and environmentaldividends

Improving the efficiency with whichenergy is used is important to Australia’seconomic, social and environmentalwellbeing. The analytical work undertakenin the development of the NationalFramework indicates that energyconsumption in the manufacturing,commercial and residential sectors couldbe reduced by 20–30% with the adoptionof current commercially availabletechnologies with an average paybackof four years.

The magnitude of inefficient energy use represents a considerable andunnecessary wastage of economicresources as well as a range of negativesocial and environmental externalities. It is clear that increased action onenergy efficiency could yield substantialeconomic and environmental dividends.

Energy consumption trends

In the 27 years from 1973–1974 to 2000–2001, total energy consumption in Australia has grown at an average2.5% per annum (see Figure 1).

The nation’s energy consumption is expected to continue to grow atapproximately 2.3% per annum in theshort-term (to 2005–2006) and 2.1% in the longer-term (to 2019–2020)1

(see Figure 2). This represents a significantincrease in total energy consumption.Without action on energy efficiency theexisting energy generation and supplyinfrastructure will require substantialadditions over the next decade.Adopting cost-effective measures thatincrease energy efficiency could make a significant contribution to reducing this rate of growth in consumption and the amount of economic resourcesthat would need to be devoted to augmenting energy supplies.

Two complementary options exist for bridging the gap between expectedgrowth in demand and the availableenergy supply:

1 Increasing total energy supply by expanding the capacity of thegeneration and supply networks for electricity, gas and other energy sources.

2 Reducing demand for energy byensuring that energy is used moreefficiently in generation, distribution and at point of end-use.

While action will clearly need to be taken to increase total energy supply, the National Framework will focus on the second option—improving theefficiency of energy use.

Energy efficiency gains limited to date

Australian governments and the privatesector have made a considerablecontribution to the facilitation of improvedenergy efficiency over the past twodecades, but much of this has relied on incremental improvements and themeasures have captured only a smallproportion of the cost-effective energyefficient potential. Governments alsorecognise that to maintain internationaleconomic competitiveness, Australiamust also capitalise on a larger proportionof the cost-effective efficiency measuresthan it currently does.

Recent analysis by the Australian Bureauof Agricultural and Resource Economics(ABARE)2 indicates that there has been a shift in the economy over the last 20 years towards less energy intensiveindustries, particularly the services sector.However, when the energy intensity of the economy is adjusted for this socalled ‘structural effect’ it is apparentthat since the early 1990s the real trendin energy intensity (a proxy for energyefficiency) shows little or no improvementin a number of sectors.

1 ABARE: Australian Energy—National and State Projection to 2019–2020, Report 02.10, June 2003.

2 ABARE: Trends in Australian Energy Intensity 1973–1974 to 2000–2001, Report 03.9, June 2003.

Section 2

Why is action needed

on energy efficiency?

Figure 1: Australian primary energyconsumption by sector 1973–1974 to 2000–2001.

Figure 2: Australian primary energyconsumption–historical and projected.

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Projected Growth Rate 2.1% p.a

Historical Growth Rate 2.5% p.a

Energy consumption in themanufacturing, commercial andresidential sectors can be reduced by20–30% with current commerciallyavailable technologies.


The energy efficiency gap

Technical analysis and economicmodelling, undertaken as an initial input to the development of the National Framework, indicates thatexisting technologies and processes have the potential to deliver verysignificant improvements in energyefficiency (the technical potential)—up to 60–70% of energy consumption in some sectors. While it is recognised that not all of these technically possibleimprovements are also economicallyviable at present (the economic potential),or that all the economic potential can be captured, it is also clear that there is a significant gap between what is bothtechnically and economically viable and what has actually been achieved to date by the market and governmentprograms (current level of energyefficiency).

It should be noted that the level of economic potential from increasedenergy efficiency varies betweencountries, due to variations in energyprices, structural characteristics, capital costs and access to technology.Direct comparisons between what is economic in other countries and what is economic in Australia can be problematic and should not beconsidered as a basis for estimating the extent of untapped potential.

None the less, the gap between the actual economic potential and the market delivered energy efficiencyoutcomes represents a significantamount of untapped market potential—there are significant economic benefitsavailable that are not exploited by themarket (see Figure 3). It is this apparentuntapped potential that the NationalFramework seeks to address.

Energy efficiency improvementpotential

As part of the research and analysis phasefor the National Framework, a preliminaryassessment of demand-side energyefficiency improvement potential andcosts was undertaken. Two scenarioswere developed:

1 Low energy-efficiency improvementscenario—current commercially availabletechnologies with an average four-yearpayback.

2 High energy-efficiency improvementscenario—existing or developingtechnologies potentially available withinthe study timeframe with an averageeight-year payback period.

The analysis indicated significant energyefficiency improvement potential availableto be exploited across all sectors of theeconomy (see Figure 4).

Applying the energy efficiencyimprovement potential to 2000–2001stationary energy use, the potential annualenergy savings are shown in Figure 5.Note that the low numbers represent a 50% penetration of the low energy-efficiency improvement potential, and the medium numbers represent100% penetration of the low energy-efficiency improvement potential (all those measures with an average four-year payback).

Figure 3: Extent of unrealised economic potential.

Unrealised economic potential

Technical energyefficiency potential

Economical potential energy efficiency

Current level of energy efficiency A

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Figure 4: Percentage cost–effectiveenergy consumption reductionpotential across different sectors.

Section 3

What is the technical

and economic potential

to improve energy

efficiency?

There is a significant gap betweeneconomically viable levels of energyefficiency and what is actually beingdelivered by the market.


Economic impact of enhanced energy efficiency

The economic modelling has shown that significant economic benefits wouldbe delivered under the very conservativescenario of only a 50% penetration overa 12 year period of the low energy-efficiency improvement scenario(excluding the electricity supply sector). The modelling results for the moreconservative scenario show that in year 12after the energy efficiency improvementhas commenced, enhanced energyefficiency delivers the followingeconomic benefits:

• Real GDP would be $1.8 billion higher (+0.2%).

• Employment would increase by around 9000 (+0.1%).

• A 9% reduction in stationary final energy consumption (-213 PJ).

• A 9% reduction in greenhouse emissions from the stationary energy sector (-32MT).

Figure 6 shows the incremental impact of improved energy efficiency on GDP.Accessing these benefits would require an investment in energy efficiency overthe 12 years of approximately $12.4billion (NPV terms) generating lifecycleenergy savings of approximately $26.9 billion (NPV terms). Overall thesemeasures would achieve a 26% internalrate of return on investment.

The gains would be much larger if aconcerted effort were made to capture all cost-effective gains. While it isrecognised that it would be unrealistic to expect to capture all cost-effectivemeasures, the analysis does indicate that achieving even a modest proportionof the potential offers considerableeconomic and environmental benefits.

Figure 5: Potential annual energysavings based on 2000–2001 stationaryenergy use across sectors.

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Figure 6: Incremental impact on GDPof low energy–efficiency scenario.

Up to 9000 jobs would be created by accelerating investment in energyefficiency.


What has been done?

A range of government measures are (or have been) aimed wholly or in part at improving energy efficiency—thesemeasures include various sectoral and cross-sectoral programs, policies, energy efficiency targets and regulations.In addition to this government activity, it is recognised that individual consumershave also undertaken many energyefficiency actions independent of theseprograms—primarily because theseactions save them money.

Voluntary, information and financialassistance programs

There has been a considerable range of energy end-use programs across the manufacturing/industrial/commercial,community/residential and governmentoperations sectors. These programshave tended to focus on raisingawareness and voluntary approachesand building capacity to identify cost-effective energy efficiency opportunities,with some limited financial incentivesand implementation assistance.There has been limited effort directed at addressing fundamental barriers toenergy efficiency or creating incentivesto accelerate investment in energyefficiency.

Regulatory measures

The focus of regulatory measures todate has primarily been on developmentand national implementation of MandatoryEnergy Performance Standards (MEPS)for a limited number of domestic andindustrial equipment and appliances;development and jurisdictionalimplementation of MEPS for new housing;and mandatory energy labelling at a national level. Where measures have been coordinated nationally andapproaches and methods harmonisedthe results have been encouraging. The National Framework would focus on expanding and building on theseachievements.

In addition to these explicitly focusedenergy efficiency measures, there havebeen some regulatory measures (suchas the NSW Electricity Retailer GreenhouseGas Benchmarks scheme), which arenot primarily targeted at energy efficiencybut are likely to generate some energyefficiency improvements.

Government operations

Governments around Australia have also chosen to demonstrate leadership by setting energy efficiency targets for their own operations. For example, the Commonwealth Energy EfficiencyPolicy includes targets for office lighting and power, central services and defence.These targets have now largely beenmet and a new range of measures will soon be developed. Several otherjurisdictions have also set energy use reduction targets of up to 25% for their own operations.

What has been achieved?

Detailed figures on what has beenachieved in total by the range ofAustralian energy efficiency programshave not been possible to compilebecause the data is incomplete and the methods used to report outcomes in most cases lack independentverification. There have been somenotable achievements in increasingenergy efficiency in some sectors. For example, the MEPS equipment and appliance program will, between2003–2018, deliver 560 PJ in energysavings with net benefits of over $4.2 billion (NPV 10% discount). However, in general, the progress hasbeen mixed and overall has been lessthan what would have been hoped for.

Several case studies have been includedin this paper to demonstrate the types of energy and cost savings that energyefficiency initiatives can deliver.However, for each case study reported,the energy savings have only beenrealised after governments worked withthe particular organisations. Here lies a major challenge for the NationalFramework—how to stimulate the routineuptake of cost-effective energy efficiencymeasures without the need for significantor ongoing government involvement?

What is the overall gap between what has been achieved to date and what may be possible?

While the range of energy efficiencyprograms and activities undertaken since the late 1980s have contributed to unlocking an improvement in energyefficiency, the actual achievement isestimated to represent less than 20% of what is estimated to be economicallybeneficial by achieving half the lowenergy-efficiency improvement scenario.

Section 4

Efforts and

achievements

to date

The National Appliance Energy EfficiencyProgram demonstrates the benefitsgained from a national coordinatedapproach.

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Energy efficiency delivers real benefits—

but uptake is very limited

While research and case studiesdemonstrate that significant energy and cost saving opportunities existthroughout the economy, it is also clearthat existing programs are not capturingthe vast majority of cost-effectiveopportunities. A range of commonwealthand state government programs have,however, had some success in assistingparticipating companies to identify theirpotential for improved energy managementand associated cost savings. Theseprograms have addressed a range of barriers, including lack of information,high transaction costs, access to finance,lower order management priorities and split incentives. The programs haveassisted companies to overcome thesebarriers and implement the opportunitiesby providing technical and otherassistance. Examples of successesinclude:

• A major brewery achieved energyperformance improvements to theplant’s refrigeration system at one site in Victoria, resulting in identified savingsworth approximately $500 000 per year.

• A leading Australian paper productsmanufacturer has identified quick paybackenergy efficiency measures in its NSWoperations that, when implemented, will reduce their annual energy bill by$2.2 million—$608 000 of these savingshave now been achieved at an internalrate of return of 74%.

• For an initial investment of $254 000,two wineries have achieved total annualprojected savings of $136 000, whileavoiding additional capital investment of $1.25 million at one site alone.

• A major bakery franchise has designedand built an energy efficient showcasebakery as a working demonstration ofbest practice building design, bakingpractices and equipment efficiency—achieving 32% savings in operationalenergy costs per year.

• A Sydney hotel has introduced a numberof simple energy saving initiatives withminimal capital cost that have resultedin annual energy cost savings ofapproximately $130 000 at an internalrate of return of 80%.

• A major Australian bank introduced an energy management program and is now achieving annual energy savingsof around $400 000 in one state at aninternal rate of return of 46%.

• An initial pilot project at a Victorianaluminium smelter will achieve energycost savings of $66 000 per annum plusproductivity improvements by reducingwaste and improving process control for an investment of $33 000.

• A NSW Government department has achieved annual energy savings of$136 000 under an Energy PerformanceContract which has funded an $805 000lighting and air conditioning upgradeproject at five sites.

• A major NSW health service has recentlyundertaken a comprehensive $465 000package of energy upgrades which willreturn annual savings of $72 000 at aninternal rate of return of 16%.

• A NSW agency is requiring theconstruction and maintenance for 15years of a building that performs at 4.5 stars under the Australian BuildingGreenhouse Rating scheme—which will use 30% less energy than a typicaloffice building.

• The introduction of a new Five StarStandard for new residential buildings in Victoria from July 2004 will mean that,within five years, new homes will deliverestimated annual energy savings worth$30–40 million.

These examples demonstrate the typesof energy and cost savings that energyefficiency initiatives can potentiallydeliver. However for each of theseexamples, it is only after significantinvolvement of government working with the particular organisations that the energy savings have been realised. In addition, for each success story there are multitudes of unexploitedopportunities. Here lies a majorchallenge for the National Framework—how to stimulate the routine uptake ofcost-effective energy efficiency measureswithout the need for significant orongoing government involvement.

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Individual barriers and deficiencies

Assessments of energy efficiencyprograms and policies have identified a range of barriers that, to varying extents,are seen as contributing to the currentdegree of low market uptake of cost-effective energy efficiency opportunities.These individual barriers and constraints,which clearly affect different sectors and types of consumers to a greater or lesser extent, include:

• Relevant information is not alwaysavailable at the right time to the rightpeople to enable informed energyefficiency choices to be made.

• The policies and programs that onlyprovide information do not address or overcome behavioural barriers and inertia.

• As energy is a small proportion of total expenditure for most consumers,the potential savings aren’t perceived as justifying the necessary investment in time and effort to consider andimplement energy efficiencyimprovements.

• Many organisations do not have easy internal or external access to thenecessary expertise or tools to identifyor take advantage of the availableenergy efficiency opportunities.

• There are limits and priorities on thecapital available to any organisation—andenergy efficiency has to compete for thiscapital with other potential investments.

• Organisations appear to use a higherhurdle rate for energy efficiencyinvestments than for other investments.

• In some situations the financialincentives are split—the person ororganisation that would need to invest in the energy efficiency improvement is separate from those that will gain the benefits of the resulting reduction in energy use.

• There is uncertainty regarding theconsistency and adequacy of resources,and continuity of government measuresover the long-term.

• Energy efficiency is not broadlyintegrated into the current curricula of TAFEs and universities, or theprofessional development programs of both professional and tradeorganisations.

• There is a lack of evidence ofachievements from energy efficientapplications and government measuresas a result of a lack of consistentmeasuring and reporting of energy use and efficiency.

Organisational and cultural inertia

It is apparent that there are significantorganisational and cultural barriers toimplementing the necessary changes toachieve greater uptake of cost-effectiveenergy efficiency opportunities. Too manyorganisations find it is easier to continueto use the same technologies andprocesses that are already in place,rather than bear the cost and risk ofinvesting time and money in newprocesses and technologies. This is, in part, driven by a tendency to ‘fit in’with historical budget allocations forenergy efficiency. It is also apparent thatsome organisations do not evenconsider the potential significant gainsto be achieved through energy efficiencyin business planning activities.

To be successful, the NationalFramework will need to provide thedrivers to overcome the individualbarriers and deficiencies, and providesufficient incentives, motivation andtargeted assistance to overcomeorganisational inertia to change.Importantly though, this assistance doesnot need to be delivered solely by the public sector. In fact, an effectivelong-term approach to energy efficiencyrequires that the issue and the solutionsincreasingly become a mainstreambusiness concern, rather than a short-term response to government measures.

Section 5

What are the barriers

to further action?

Could you provide the following feedback?

• Does your organisation/body stronglyagree or disagree with any of theseidentified barriers? Are there any barriersthat your organisation/body thinksshould be added to those mentioned in this paper?

• What does your organisation/body see as the major barrier(s) you face in accelerating the uptake of energyefficient practices and technologies?(Prioritise/highlight these barriers thatare particularly important to yourorganisation/body.)

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Lack of national coordination of government policy

There are currently a significant numberand range of different energy efficiencyprograms and policies across alljurisdictions. While the extent of theprograms varies significantly betweenjurisdictions and different sectors, it is apparent that improved nationalcoordination has the potential to achievea greater result for any given level ofavailable resources devoted to energyefficiency than continuation of thecurrent, largely uncoordinated approach.

A clear example of the benefits that canbe gained from a coordinated nationalapproach is evidenced by the successand achievements of the MEPS program.MEPS will make a major contribution to increasing energy efficiency in a range of appliances over coming years. Expanding the level of nationalcoordination to other energy efficiencyareas through the National Frameworkwould assist in capturing a greateramount of the cost-effective energyefficiency potential.

In addition to minimising overlap and duplication, and maximising theefficiency of government resources,improved coordination has the potentialto reduce the cost and complexity forconsumers—for example, by reducingunnecessary differences in approachand compliance requirements betweenjurisdictions. Successfully addressingthe need for improved nationalcoordination is therefore considered to be a vital element of any nationalframework aimed at unlocking greaterenergy efficiency for Australia.

There are a number of reasons why a nationally coordinated approach is necessary if the full economic, social and environmental potential of energy efficiency is to be unlocked.These reasons include:

• minimising duplication

• maximising efficiency of governmentfunded programs

• reducing cost and complexity forconsumers in adopting cost-effectiveenergy efficient applications

• improving national consistency in approaches

• facilitating certainty of direction in anincreasingly national marketplace

• raising the priority of energy efficiency in jurisdictions with limited resources

• developing a standard national approachto the measurement, monitoring andreporting of energy efficiency measures.

A range of barriers contribute to the lowmarket uptake of cost-effective energyefficiency opportunities.

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Challenges to be addressed

A range of challenges to address the identified barriers include:

• Ensuring appropriate incentives andsupport be provided so that continuousimprovement in energy efficiencybecomes a mainstream and self-sustaining business activity in Australia.

• Building a self-sustaining energyefficiency industry in Australia.

• Ensuring that the necessary expertiseexists and is available to consumers to identify and implement energyefficiency opportunities.

• Making it easier or cheaper forconsumers to exploit the opportunitiesfor energy efficiency savings. For example, assisting to overcome or minimise the transaction costs ofimplementing energy efficiency measures.

• Reducing inertia and increasing themotivation to implement energyefficiency opportunities, for example by increasing the perceived level andrange of benefits in implementing energyefficiency opportunities.

• Making energy efficiency importantenough for decision makers to devotetime and resources to addressing theopportunities. For example, in the short-term, how can the necessary level ofsenior management awareness of theissues and opportunities be raised?

• Connecting the savings produced with those who are required to make theinvestments, particularly in the industrialand commercial building sector.

• Encouraging and facilitating internal or external access to the requiredcapital for investment in energyefficiency opportunities—for example, by raising the internal priority forinvestment in energy efficiency orspreading the costs or risks.

• Assessing the extent of informationgaps, and ensuring that relevant,consistent and non-duplicativeinformation (from awareness raising to detailed technical information) gets to the right people at the right time.

• Encouraging increased monitoring of the necessary information andencouraging the provision of thisinformation to consumers and thegovernment to ensure that measuresand application are effectively deliveringthe desired outcomes.

• Developing a long-term nationallyconsistent approach to energy efficiencywhile maintaining sufficient flexibility for regional or jurisdictional initiatives.

In addition to these general challengesthere are several sector specificchallenges that warrant attention.

Section 6

What are the

challenges to

achieving more?


• Does your organisation/body strongly agree or disagree with any of these identified challenges? Are there any other challenges that need to be added to those already listed in this paper?

• What does your organisation/body see as the major challenge(s) you face in accelerating the uptake of energyefficient practices and technologies?(Prioritise/highlight these challenges that are particularly important to your organisation/body.)

• What possible solutions does yourorganisation/body propose to effectivelyaddress the specific challenges?

• What potential opportunities does your organisation/body foresee as being realised from the resolution of the specific challenges?

Building a self-sustaining energyefficiency industry is a key challenge.

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Industrial sector

The industrial sector coversmanufacturing, mining, agriculture and construction. Stationary energy use in 2000–2001 was 1404 PJ. The manufacturing sector accounted for 85% of this (1191 PJ) and since1973–1974 energy consumption hasgrown at an average 1.0% per annum.However there have been majorstructural adjustments to the industrialsector over this time, with many smallerenergy intensive industries exiting themarket. The energy intensity of theremaining areas of industry hasincreased at a greater rate with theincrease in mechanisation and newtechnologies.

Based on the work undertaken to date, a key barrier for accelerating energyefficiency in this sector is the inertia of current organisational attitudes and cultures towards energy and thecontinued use of the same technologiesand processes that are already in place.Specific challenges identified for theindustrial sector include:

• embedding energy efficiencyimprovements and investment into the top priorities of business, such as productivity improvements

• stimulating energy innovation

• expanding coverage and influence tosmall-to-medium enterprises (SMEs)

• assisting middle management to presenta successful business case for energyefficiency to executive management

• encouraging opportunities for thinkingbeyond customary approaches

• engaging all personnel across a site in energy management thinking.

Commercial sector

Total energy consumed in thecommercial sector in 2000–2001 was218 PJ and consumption has grownstrongly at an average of 3.8% per yearsince 1973–1974. The growth of energyconsumption can be attributed tostructural change in the economybringing with it an increased number of commercial buildings, an increasedproportion of air conditioned buildings,and an increased use of electrical andelectronic equipment.

Like the industrial sector, a key barrier for accelerating energy efficiency in this sector is the inertia of currentorganisational attitudes and cultures.Some specific challenges for thecommercial sector are:

• stimulating energy innovation incommercial building design andconstruction

• supplying high-performing energyefficient buildings

• stimulating energy efficient upgradesand refurbishment of existing buildings

• ensuring building tenants are aware of building energy costs and the optionsfor reducing these costs

• improving the energy management skillsof building management

• demonstrating the operationaleffectiveness and non-energy benefits of low-energy design buildings

• effectively demonstrating governmentcommitment and leadership.






The inertia of current practice needs to be overcome.

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Residential sector

Total energy consumed in the residentialsector 2000–2001 was 400 PJ andconsumption has grown at an averageof 2.0% per annum since 1973–1974.Nationally, the major end-useapplications are space air conditioning(45% of energy use) and water heating(25% of energy use), but there are majordifferences across states.

Based on the work undertaken to date,a key barrier in the residential sector is lack of sufficient relevant informationfor decisionmaking, combined withconsumers and market intermediaries’attitudes, behaviours and culturetowards energy use. Specific challengesidentified for the residential sectioninclude:

• accelerating the refurbishment ofhousing stock for greater energyefficiency

• ensuring disclosure of housing energyperformance to empower buyers andtenants, such as required in the ACT

• ensuring segments of the communitywith limited resources are notdisadvantaged.

Conversion sector

Energy used for electricity generation,including transmission and distributionlosses, in 2000–2001 was 1474 PJ, and has grown at an average of 4.0% per year since 1973–1974.

Specific challenges identified for theconversion sector include:

• stimulating more significantimprovement in generator energyefficiency

• stimulating alternative energy generationoptions that increase the reliability and thermal efficiency of the energysupply system.

Intermediaries

Based on the work undertaken to date, key barriers in this sector areintermediaries’ attitudes, behaviours and culture towards energy and theirwillingness to advocate and innovate.Specific challenges identified for theintermediaries sector include:

• making it more profitable to sell energy efficiency

• creating an energy market that deliverslow energy-cost energy services tobusiness and the community, not justlow energy prices

• creating an environment forintermediaries to advocate energyefficiency to clients

• motivating intermediaries to provideenergy efficiency services

• increasing incentives for energy retailersto provide energy efficiency services.






For energy retailers, how can it be mademore profitable to sell energy efficiency.

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The first step and the aim of thisDiscussion paper is to get the views and ideas of key stakeholders ingovernment, industry and the communityon how to effectively address the keybarriers and challenges and opportunitiesoutlined in this paper.

In addition to welcoming writtensubmissions, a consultation process willbe established to provide an opportunityfor interested organisations andindividuals to participate in discussionsabout the development of the NationalFramework. This may includestakeholder workshops which will beorganised by the relevant governmentagency in each state and territory. Thetiming and location of these workshops,and the closing date for writtensubmissions, are listed at theSustainable Energy Authority Victoria’swebsite, visit www.seav.vic.gov.au The closing date ensures that there is anopportunity for thorough considerationby all key stakeholders. Interestedparties are invited to forward writtensubmissions to:

National Framework for EnergyEfficiency SecretariatGPO Box 621Canberra ACT 2601E-mail [email protected]

Following receipt of stakeholder views and any necessary follow-upconsultations, a draft NationalFramework will be prepared outliningpossible policy and program options to deliver enhanced energy efficiency.The options will be based on the EnergyEfficiency and Greenhouse WorkingGroup’s preliminary assessment ofenergy efficiency initiatives and willincorporate, where appropriate, theviews of key stakeholders. Subject to approval by the Ministerial Council on Energy, the draft National Frameworkwill then proceed through a formalpublic consultation process.

Section 7

The next steps

Feedback, views and ideas from keystakeholders are invited.

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Notes

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