victoria: the green jobs state

VICTORIA – THE GREEN JOBS STATE: SEIZING THE OPPORTUNITIES

SEIZING THE OPPORTUNITIES

2 – Victoria – the Green Jobs State: Seizing the Opportunities

Victoria – the Green Jobs State: Seizing the Opportunities is published by Environment Victoria.

Environment Victoria would like to thank the principal authors of this report: Jay Rutovitz, Anne Martinelli and Fraser Brindley. We would also like to thank all of those who assisted us by providing information for this report.

Printed on 100 per cent recycled paper

Environment Victoria 2/60 Leicester St, Carlton Vic 3053 PO Box 12575 A’Beckett St, Melbourne 8006 03 9341 8100 [email protected]

Environment Victoria is the peak non-government, not-for-profit environment organisation in Victoria. As the state’s leading environment group, we believe that our future depends on all Victorians. That’s why our goal is to mobilise all 5 million Victorians to safeguard our environment. At the heart of our work is a belief that people are a part of the environment, and not separate to it. So we work with people from all walks of life and levels of environmental awareness to solve the challenges common to all of us. Environment Victoria has been mobilising Victorians for nearly 40 years. We know that the decisions we make today, will create the world we live in tomorrow. And we believe that together, we are making a difference.

© Environment Victoria, 2009.

Copies of this report are available at www.environmentvictoria.org.au

Victoria – the Green Jobs State: Seizing the Opportunities – 3

IntroductionGlobally, our economies are in the doldrums. Stories of recession, job losses and failed businesses have been told all too frequently in recent months. And Australia’s economy hasn’t been immune, as we enter the recession and unemployment climbs.

Meanwhile the world’s most eminent climate scientists have confirmed that climate change is proceeding more rapidly and powerfully than our worst case scenarios predicted. These scientists are calling for urgent and renewed effort to reduce emissions to safeguard our future.

Amidst all this bad news, however, a new global conversation is emerging: can we renew our economies and address the environmental chal-lenges we face at the same time?

It is now clear that the choice between economic growth or environmental protection is a false one. Green jobs allow us to do both.

A green job helps, not hinders our environment. Whether it is an engineer that creates toxic free chemicals or the manufacturer that makes them; the plumber that installs solar water heating or the accountant that advises on carbon liabili-ties and opportunities: a green job is always in demand because we will always need a safe environment in which to live.

Green jobs not only deliver the double dividend of economic stimulus and environmental solu-tions, they can also deliver the third dimension of social equity. Insulation programs, for example, reduce energy bills for low-income households

as well as reducing emissions and stimulating the insulation market.

As the case studies in this report demonstrate, Victoria is well placed to become the Green Jobs State. We have established green industries, em-ploying tens of thousands of Victorians. Howev-er, the state of our environment is still in decline. To adequately address the pressures of climate change, drought, over-allocated river systems, materials depletion and consumption we need every Victorian job to become a green job.

Globally the economic powerhouses of the 21st century will be those economies that see the writing on the wall and make the transition to green jobs. Victoria could be one of the early movers and reap the rewards.

As the case studies also show though, these jobs and industries won’t just emerge. They need to be identified and supported through de-liberate policy measures and economic stimulus packages that create stable growth for green industries, and the workforce training and skills these industries will need.

Environment Victoria is heartened by the state government’s plan to develop a ‘Green Jobs and Economy Plan’ in 2009. These case studies and the Green Jobs Summit are intended to explore Victoria’s potential to transform its economy and set a proactive agenda for a green, prosperous and inclusive society.

Green jobs: it’s just good business.

About the reportVictoria – the Green Jobs State: Seizing the Opportunities was prepared by Environment Victoria to coincide with the Green Jobs Summit organised jointly by Environment Victoria and the Brotherhood of St Laurence. The aim of the report is to profile a cross-section of Victorian industries, summarise their current status and explore opportunities for their growth. The report profiles five industries: solar water heating, rail manufacturing, energy and water efficiency, recycling and wind power.

These industries were chosen due to the signifi-cant growth they are experiencing, or the poten-tial rapid growth they could experience with the right policy settings. Rapid growth of green jobs creates both opportunities and challenges, and we have attempted to document both.

These industry case studies provide just a taste of what a green jobs transformation might look like in Victoria. While the industries pro-filed might all fall within traditional definitions of ‘green jobs’, it is important that we green all Victorian jobs and industries, rather than devel-oping industries which operate as green ghettos amid a sea of brown. Further research into other industries and the development of a comprehen-sive ‘Green Jobs Plan’ for Victoria are the logical next steps.

We look forward to being part of an exciting new phase where industry policy, social policy and environmental policy combine to transform Victoria’s economy.

VICTORIA – THE GREEN JOBS STATE


Workers preparing the foundations for a wind turbine at Waubra windfarm. Photo courtesy Acciona Energy


CASE STUDY 1: SOLAR WATER HEATING .........................................................................................................6

CASE STUDY 2: RAIL ........................................................................................................................................12

CASE STUDY 3: ENERGY & WATER EFFICIENCY IN RESIDENTIAL BUILDINGS ...........................................20

CASE STUDY 4: RECYCLING ...........................................................................................................................34

CASE STUDY 5: WIND ......................................................................................................................................44

CONTENTSCONTENTS


CASE STUDY 1: SOLAR WATER HEATING

Summary An introduction to the industrySolar water heating is booming in Australia. More than 70,000 systems were installed in 2008, up from 12,000 in 2001.1 This is an annual growth rate of more than 20 per cent, surpassing average global growth of 16 per cent per year between 2002 and 2006.2 (See Fig 1)

Australia currently ranks seventh in the world in solar water heating installed per thousand peo-ple and sixth in terms of total capacity. But there is still a long way to go.

Although the proportion of Australian houses with solar water heating has doubled in the past seven years, only 7 per cent of Australian house-holds currently use it. Israel, with comparable solar resources, has nearly three times as much solar water heating installed per person. (See Fig 2)

Nationally, the industry is worth more than $300 million per annum3 and employs an estimated 2700 people.4 Most of these jobs are in distribu-tion and sales.

There are six solar water heating manufacturing facilities in Australia. Since 2000, production at these facilities has more than doubled, up from about 36,000 units per year to nearly 78,000 units in 2008.5 (See Table 1)

There is also a healthy export business in solar water heaters, although growth is not keeping pace with the expanding domestic market. In 2002, about half of the systems produced in Australia were exported. This fell to a third by 2007, and systems have been imported since 2005.6 However, the vast majority of installations

still use domestically manufactured solar water heaters.

Solar accounts for 14 per cent of all water heat-ers produced in Australia, greater than the solar share of installation.7

The state of the industry in VictoriaIn Victoria, annual installations of solar water heating have grown phenomenally over the past six years. In 2008, there were more than 19,000 systems installed, up from approximately 3000 in 2002. Victorian installations overtook Queensland for the first time in 2008, and nearly equalled the number of installations in NSW. The

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2001 2002 2003 2004 2005 2006 2007 2008

Fig 1: Solar water heating installations, Australia. Data is for installations registered for RECs, which excludes some systems.


Victorian industry now generates sales of ap-proximately $78 million annually8.

The latest employment data for the solar industry dates from 2005. Assuming that the ratio of em-ployment to installations has remained constant and evenly spread across the country, there are currently around 700 jobs in solar water heating in Victoria.

Currently there is only one solar water manu-facturing facility in Victoria, Aquamax, based in Moorabbin. There is also a tank manufacturer, Everlast, in Dandenong that provides tanks used by small suppliers who import solar collectors.

Current state and federal government policiesAustralia offers both state and federal govern-ment incentives for solar water heating and has performance requirements for new buildings in Victoria, Queensland, NSW, and South Australia that encourage the installation of solar water heating.

The cash support available for solar water heat-ing in Victoria is:

The Mandatory Renewable Energy Target

Renewable energy certificates (RECs) may be created within twelve months of a solar water heater installation (an estimate is made of the energy savings over the life-time of the system). This usually amounts to $800 to $12009.

Federal rebate

There is a federal rebate of $1600, but this is not available if the householder is ac-cessing an insulation grant.

Metropolitan Melbourne rebates

Metropolitan Melbourne rebates of $900 to $1500 are available, depending on the performance of the system installed.

Regional Victoria rebates

Regional rebates of $1900 to $2500 are available, depending on the performance of the system installed.

Victorian Energy Efficiency Target (VEET)

Solar water heaters can create VEET Cer-tificates proportionate to the greenhouse gas abatement expected to occur over the lifetime of the system. On average a solar water heater can create about 30 certifi-cates.10 Certificates are currently trading at approximately $17 each, so this could provide further support of about $510.

The Victorian rebate and the federal rebate com-

bined are capped at $2500. Different rebates apply depending on the size of the system and its performance, and the regional Victoria rebate is partly means tested.

The performance requirements for water heating vary state by state, and there is at present no greenhouse emissions performance standard under the Building Code of Australia, although this is under discussion.

The states currently require the following:

Queensland has introduced regulations to prevent electric water heaters being used in newly built houses. This will be extended to include replacement units from 2010.

NSW requires a minimum greenhouse gas reduction score under the BASIX

0

200

400

600

800

1,000

1,200

0.6

Cypru

s

3.4

Isra

el

2.3

Austr

ia

0.1

Barb

ados

2.3

Gre

ece

65

Chin

a

3.8

Austr

alia

1

Sw

itzerland

0.6

Jord

an

6.6

Turk

ey

6.2

Germ

any

21

Unite

dS

tate

s

kW per thousand people

Total gigawatts installed in each country

Fig 2: Solar water heating per thousand people.

Company Manufacturing facilities

Aquamax Moorabbin, VIC

Beasley/Rinnai Devon Park, SA

Dux Hot Water Moss Vale, NSW

Rheem Rydalmere, NSW

Solahart/Edwards Welshpool, WA

Solar-Mio Albury, NSW

TABLE 1: Australian solar water heater manufacturers



scheme for all newly built dwellings and major retrofits. While no water heating tech-nology is ruled in or out, it would be very difficult to reach the BASIX target with a conventional electric water heating system. The proportion of new houses with solar water heating has increased rapidly, reach-ing 30 per cent in 2008.11

Victoria requires that newly built houses fit either a rainwater tank or a solar or heat pump water heating system. The solar water heater must be gas-boosted if gas is available as that is the least emissions product, and, whether gas or electric boosted (or heat pump) it must save 60 per cent of emissions compared with conven-tional water heating.

We recommend that minimum energy and water standards are required at point of sale or lease in order to accelerate energy and water retrofit-ting (further detail is included in Case Study 3 on household water and energy efficiency).

Jobs created by this industryThe most recent employment data for the Aus-tralian solar water heating industry is from the Clean Energy Report 200712. The report breaks down the types of jobs involved in the industry, but only includes staff employed by solar water heating companies.

Jobs are also created for plumbers and other construction trades because of the additional la-bour involved in fitting a solar water heater com-pared to a conventional electric or gas system.

Making a conservative estimate of four extra hours of work for each system installed, this is equivalent to around 160 additional full time plumbing jobs Australia wide for the 70,700 installations in 2008.

Distribution and sales account for nearly 40 per cent of employment in the sector, followed by administration, research and development at 34 per cent, manufacturing jobs at 21 per cent, and plumbing at an estimated 6 per cent. (See Fig 3)

Growing the industryThe potential for growth in the solar water heat-ing industry is considerable. Despite the boom in installations, only 7 per cent of houses na-tionwide currently use solar energy to heat their water. In Victoria, solar water heating is used in just 3 per cent of households. (See Fig 4)

By contrast, 21 per cent of Western Australian households use solar, 9 per cent of Queensland houses, and more than 50 per cent of house-holds in the Northern Territory.13

Increasing the proportion of solar water heating in Victorian households to 30 per cent by 2020 would require 57,000 installations in the state per year beginning in 2010.14 These would need to be a combination of retrofits, replacing current electric heaters, and solar water heating in new buildings. This would represent a trebling of the current industry, based on the 18,000 installa-tions completed in 2008.

Assuming that the number of jobs per installa-tion remains the same as in 2005, this expansion could create an additional 1500 jobs, bringing

the total jobs created by the Victorian solar water heating industry to 2200.

While the number of associated jobs per instal-lation may decline with economies of scale, plumbing has to be local and is unlikely to be reduced to less than four hours per installation. A total of 57,000 installations per year would therefore create or maintain the equivalent of about 130 full-time plumbing jobs.

This program of retrofitting solar water heaters would also reduce Victoria’s greenhouse gas emissions by 1.8 million tonnes annually.15

Policy measures that would help promote this growthPolicies to support the growth of the solar water heating industry fall into two main categories: cash support and mandatory standards. Cash support comes in the form of rebates or tax

Distribution and sales 39%

Admin, research, other 34%

Manufacturing21%

Plumbers (estimate) 6%

Fig 3: Solar water heating industry jobs.


incentives, while mandatory standards can be applied through building codes or planning requirements.

Many countries use a mixture of both ap-proaches (See Table 2). China is currently the only country in the world to have a specific solar water heating target of 300 million square metres

of collector by 2020 (equivalent to one quarter of Chinese households with solar water heating).

Cyprus (93%) and Israel (85%) have the highest penetration in the world, with nearly every pos-sible household using solar water heating. This is the result of mandatory policies for solar water heating brought in nearly 30 years ago. Spain

AUSTRALIA

Electricity 46%

Gas 37%

Solar 7%

Other 10%

VICTORIA

Electricity 29%

Gas 65%

Other 3%

Solar 3%

Fig 4: Houses with solar water heating, 2008.

AUSTRALIA

VICTORIA



and India, and parts of Germany, also have mandatory policies. China plans to mandate solar water heating in some building types.

International examples demonstrate that a mandated system provides the greatest overall driver for the industry.

An accelerated phase-out of electric water heat-ing could be delivered as part of a coordinated effort to green Victoria’s housing stock as out-lined in case study 3 on household energy and water efficiency. This could be delivered through government rebate and investment programs, new building standards, and minimum energy and water efficiency standards applied to prop-erties at the time of sale or lease.

Training required to promote this growthCurrently, solar water heating is not covered in the TAFE training of many plumbing apprentices. As it increasingly becomes a significant part of Australia’s water heating technology there is an argument for high quality training to be included in these courses. There is also a case to be made for introduction of mandatory training as a license condition for plumbers who are already qualified.

“When solar was 1 or 2 per cent of the market, voluntary courses in solar were fine, as some plumbers might never see a solar system. But the way things are going, we have to plan at least 20 or 30 per cent, as the market moves to environmentally friendly systems. The only way to ensure consistent quality is for every plumber to be

trained. And the only way that happens is if it’s a license condition.” Les Patterson, General Manager, Dux Water Heating17

Training in solar water heating installation is offered to licensed plumbers by GreenPlumb-ers®, a private company set up by the Master Plumbers and Mechanical Services Association of Australia. They offer an Environmental Solutions course, with five nation-ally accredited components, including a four

hour module on solar hot water installation.

Since July 2008 the solar water heating com-ponent has been offered in Victoria, as part of a partnership between GreenPlumbers® and Sustainability Victoria. While more than 1000 plumbers have completed the course there is still a large training gap as there are 21,000 plumbers registered in Victoria.

Swinburne, NMIT and Chisholm TAFE also offer a training course on solar hot water, as part of their Certificate Four in Renewable Energy. This course is approximately 60 hours, but is not restricted to plumbers. 18

A training course was also developed by the Business Council for Sustainable Energy (now the Clean Energy Council) in consultation with industry, with the help of approximately $100,000 in funding from the Australian Green-house Office.19 This training course is yet to be deployed.

There may be a case for further developing this course with a view to incorporating best practice installation into standard training for plumbers.

Success storiesAquamax

Aquamax’s Moorabbin base is the only manufac-turing facility for solar water heating in Victoria. They make gas, electric and solar water heaters. Currently, they produce between 2500 and 3000 solar water heaters annually, and about 55,000 gas or electric water heaters. Their annual turnover is $2.2 million for solar ($36 million in total). They employ 120 people, with all but four

Country Mandatory policy Subsidy

Germany All new residential buildings must get at least 14 per cent of all hot water and heating from renewable, including solar. Exist-ing buildings must be retrofitted to supply 10 per cent of the heating and hot water load

yes

India A minimum 20 per cent of hot water must be from solar (includes residential and com-mercial buildings)

no

Israel Yes – first country to introduce mandatory solar requirement

no

San Paolo All new buildings > 800 m2 must install solar water heating

yes

Spain 30 per cent – 70 per cent of hot water must be supplied by solar (depending on climate zone and the backup fuel used)

no

TABLE 2: Countries with mandatory policies on solar hot water16


of these employed in Victoria. This is the equiva-lent of six people working full-time on solar water heating. Over the next five years, Aquamax expect their business to double and solar water heating to increase to about 40 per cent of their business. This would mean an increased work-force of about 200 people, with 80 full-time solar jobs. Currently, 70 per cent of jobs are in manu-facturing, and 30 per cent in administration, sales and distribution.

Further informationDetails of rebates available for solar water heat-ers: www.hotwaterrebate.com.au

Training courses in solar water heating for li-censed plumbers: www.greenplumbers.com.au

Office of the Renewable Energy Regulator: www.orer.gov.au

International Energy Agency Solar Heating and Cooling Programme: www.ieashc.org/index.html

Sustainability Victoria listing of solar water heat-ers eligible for rebates: http://www.sustainability.vic.gov.au/www/html/2022-solar-hot-water-for-industry.asp

Endnotes1 Data on annual installations is for the number of systems registered for renewable energy cer-tificates (RECs). This will be an underestimate, as some systems will be installed without claim-ing RECs, particularly in the Northern Territory.

2 REN21. 2008. Renewables 2007 Global Status Report. Paris: REN21 Secretariat and Washing-

ton, DC: Worldwatch Institute.

3 The value of sales is estimated from the Mark Ellis and Associates (2003), the Australian Sustainable Energy Survey 2002. Estimating the Contribution of the Sustainable Energy Industry to the Australian Economy. Published SEDA, assuming that sales are proportionate to the number of installations.

4 Employment is calculated from the latest avail-able data, which was for 2005 (Business Council for Sustainable Energy, Clean Energy Report 2007), assuming that the number of employees per installation has remained constant, and add-ing in an estimate for plumbing jobs. Plumbing jobs have been calculated assuming that each installation involves four hours extra work com-pared to fitting a conventional gas or electric water heater.

5 Production data from ABS, data supplied March 2009.

6 Business Council for Sustainable Energy 2008. Clean Energy Report 2007.

7 Production data from ABS, data supplied March 2009.

8 Sales are based on the proportion of annual installations occurring in Victoria, with the overall value taken from estimate of total sales in 2002 (see note 2).

9 The RECs price fluctuates, and different num-bers of RECs are created depending on the sys-tem performance, so the actual amount varies.

10 Personal communication, Belinda Thomas, Department of Primaty Industry, 26 March 2009.

11 NSW Department of Planning. 2008. Single Dwelling Outcomes 2005-2008. BASIX Ongoing Monitoring Program.

12 Op cit 6, page 30.

13 From ABS. 2008. Environmental Issues: En-ergy Use and Conservation, 4602.0.55.001 Mar 2008

14 Household projection from ABS. 2004. from Household and Family Projections Australia, 2001 to 2026. Table 6.15, Series 2.

15 Assuming that the 587,000 electric water heaters currently installed in Victoria are re-placed, and allowing 75 per cent reduction in emissions from installing solar system. Addition-al installations to reach 25 per cent of homes are assumed to be in new houses, so no emissions reduction is included.

16 IEA, 2008, Solar Heat Worldwide, http://www.iea-shc.org/publications/statistics/IEA-SHC_ Solar_Heat_Worldwide-2008.pdf

17 Les Patterson, General Manager, Dux Water Heating, personal communication, 26th March 2009.

18 Andrew Blair, personal communication, 25 March 2009.

19 Andrew Blair, personal communication, 25 March 2009.


An introduction to the industryVictoria is facing the twin challenges of climate change and the global financial crisis. Already the economic downturn has cost thousands of Victorian jobs, many in the manufacturing sec-tor. Expectations are for unemployment to rise further in the coming year.

At the same time, the impacts of climate change and peak oil will be felt most by low-income and disadvantaged Victorians, particularly those living on the outskirts of our cities. People living in poor quality housing in areas badly served by public transport have few options for protecting themselves from the impacts of rising prices for essential services such as fuel, energy and water.

Carefully targeted investment, however, to-gether with regulatory measures can help turn these challenges into opportunities. One consequence of increased community concern about climate change and rising fuel prices has been a rapid increase in the demand for public transport in Melbourne. Increased govern-ment investment in rail rolling stock to meet this demand has the potential to create thousands of jobs in Victoria’s manufacturing sector and provide a solid platform for expanded export opportunities.

The state of the industry in VictoriaVictoria’s history of rail (train and tram) manufac-turing goes back more than a century. During this time the vast majority of rolling stock has been manufactured locally.

In 1999, the Victorian Government awarded a

number of franchises following the privatisation of Victoria’s public transport network. Included in the franchise conditions was a requirement to purchase new rolling stock (for trains and trams). Between 1999 and 2002, orders were placed with Alstom France for 174 X’Trapolis rail-cars and 31 Citadis trams, Siemens Germany for 216 Metro railcars and 59 Combino trams, and Bombardier for 76 VLocity railcars for VLine’s regional passenger network.1 All of these trains were wholly manufactured overseas except for the Bombardier VLocity, which was manufac-tured in Dandenong.

When the Bracks Government came to power, it successfully negotiated for around $300 million worth of the work associated with these existing contracts to be undertaken in Victoria. However, a subsequent ‘top up’ order for an additional 108 X’Trapolis railcars from Alstom were fully imported.

Melbourne has one of the world’s largest tram networks and yet Victoria currently has no tram manufacturing capacity at all. Trams were last built in Victoria 25 years ago by Comeng, which at its peak employed 400 to 500 people and trained hundreds of apprentices at its site in Dandenong.

The major players in Victorian rail manufacturing are:

1. Bombardier TransportationCanadian company, Bombardier Incorporated operates under two manufacturing arms: Bom-bardier Aerospace and Bombardier Transpor-tation. Bombardier Transportation (BT) is the world’s largest manufacturer of passenger rail

Summary


rolling stock, with a market-share in excess of 20 per cent. More than 63 per cent of BT’s busi-ness comes through the manufacture of train rolling stock. BT is the world’s number one sup-plier of light rail vehicles (trams), metros, region-al and commuter trains, electric locomotives and fleet maintenance services.

BT operates 45 production sites in 22 countries, employing approximately 30,000 people world-wide. In the year ending 31 January 2008, BT earned revenue of nearly $US 7.8 billion, $257 million of which was earned in the Asia-Pacific region.2

Within Australia, Bombardier Transportation is involved in the design, manufacture and fleet

maintenance of passenger rolling stock. They have manufacturing facilities in Dandenong, Vic-toria and Maryborough, Queensland as well as fleet maintenance sites in South Australia, West-ern Australia, New South Wales and Queens-land. Approximately half of BT’s Australian staff are located in Victoria, the site of its regional headquarters. (See Table 1)

BT completed a contract with VLine to design and manufacture 76 VLocity railcars for its passenger services to regional Victoria. These trains are now in service. In addition to the origi-nal order, follow-on orders for 22 Vlocity railcars are in progress and most recently the govern-ment announced an order for a further 32 rail-cars delivered as two and three-car sets. These are all to be built at the company’s Dandenong workshops.

Bombardier Transportation has also completed several interstate contracts including:

commuter railcars in a joint ven-ture with EDI Rail for the Public Transport Authority in Western Australia. A further order for 15 similar units is now in produc-tion; and

Rail. A further order for 20 similar trains is now in early production.

2. United Group Limited / Alstom Australia and New ZealandThe French company Alstom Group operates two business arms in power generation and rail transport and employs 65,000 people in 70 countries worldwide. Alstom Transport controls 18 per cent of the worldwide railcar market and

achieved sales of more than 5.5 billion euros (A$10.6 billion) in the year ending March 2008.3

In 2005, Alstom’s Australia and New Zealand transport operations were acquired by Austral-ian-based engineering and property services company United Group Limited (UGL). In Aus-tralia, UGL Rail operates rail infrastructure and rolling stock manufacture and maintenance inter-ests serving the passenger and freight markets. UGL has an alliance with Alstom Transport for the fit-out of new rolling stock. UGL Rail is one of four UGL divisions. The others are UGL Infra-structure, UGL Resources and UGL Services.

In February 2009, the Victorian Government added an additional 120 X’Trapolis railcars to an existing order for 108, bringing the total order to 228 passenger railcars. The delivery of the new trains is set to begin in the last quarter of 2010.4 The original 108 trains will be manufactured in

TABLE 1: Bombardier in Australia

Location Type of work Employed

Dandenong Manufacture of VLocity DMUs for VLine

130

West Melbourne

Maintenance of VLocity Diesel fleet

13

Maryborough, Qld

Manufacturing

Western Australia

Maintenance of B Series EMU fleet with Downer EDI Rail for WA PTA

Adelaide Maintenance of TransAdelaide diesel fleet

140

Pyrmont, NSW Tram maintenance for Metro Transport, Sydney

Milton, Qld Design and project man-agement

TABLE 2: UGL Rail in Victoria

Company name

Type of work Locations Employed

Regional Fleet Maintenance

Passenger and freight fleet fit-out and maintenance

Ballarat, Spotswood, Preston

250

Mainco (70% share)

Infrastruc-ture (tracks, stations) maintenance

Burnley, Flinders St, depots around Melbourne

500

UMTL Rolling stock maintenance

Epping, Bayswater


Poland and fitted out in Italy. The additional 120 passenger cars will be manufactured in Poland, one 6-car train fitted out in Italy, and the balance then shipped to Australia for fit-out in UGL Rail’s Ballarat workshops.

3. Supply chain manufacturers

Approximately 1000 people are employed directly by the major rail rolling stock manufac-turers in Victoria and another 5000 to 10,000 employed in their supply chain.

Around 100 small to medium sized businesses in Victoria provide goods and services as di-verse as air conditioning, aluminium and glass products, cabling, rail carriage interiors and train management systems to the major rail manufac-turers. These businesses employ between 50 and 100 people each.5

ARM Group is a consortium of four local manu-facturing companies based in Dandenong, sup-plying equipment and components to Bombar-dier. Collectively, the consortium employs 200 people and has attracted $30 million worth of work as a direct result of the contract to manu-facture the VLocity train.

Current state and federal government policiesSince 2001, all Victorian Government depart-ments have been required to apply the Victorian

Industry Participation Policy to all projects over $3 million in metropolitan Melbourne and over $1 million in regional Victoria. Shortlisted bidders are required to prepare a VIPP Statement that addresses:

level of local content;

the number of new jobs created; and

possible skills and technology transfer.6

In 2008 the policy was enhanced with an addi-tional requirement added to the Victorian Manu-facturing Statement (VIMS). Major projects with

TABLE 3: Types of jobs within the rail industry

Engineers

Trades or Trade Equivalents

Operations

Professionals

Construction of VLocity train at Bombardier, Dandenong. Photo courtesy Bombardier


whole-of-life costs in excess of $250 million and considered of strategic significance to the Victo-rian economy, will now be subject to additional local content requirements.

The purchase of rail rolling stock has been iden-tified as a key area of strategic importance. The strategy commits the government to achieving 40 per cent local content on a whole-of-life basis for train purchases, including initial capital costs, maintenance and any related training.7

However, for every $1 spent on purchase, another $2 is spent during the life of the vehicle on maintenance.8 Given that the majority of maintenance is conducted locally, it is therefore relatively easy to satisfy the 40 per cent ‘whole of life’ requirement, even if the vehicle is manufac-tured overseas.

Jobs created by this industryThe rail sector in Australia encompasses a diverse range of players including rail operators, track owners and managers, and manufacturers of rolling stock and components.

In Victoria, around 80 per cent of the rolling stock manufacturing workforce is made up of mechanical fitters and electricians, with the bal-ance comprised of mechanical and electrical engineers and administrative staff.

The rail workforce, however, is aging. The rail industry estimates it will need to access up to 85 engineers and 175 trades people in Victoria every year for the next five years to meet de-mand and cover retirements.9 A lack of skilled workers available for supervision can be a bar-

rier to training greater numbers of apprentices, thus setting up a vicious cycle of chronic worker shortages.

Growing the industryThe global financial crisis is having a severe im-pact on Australian manufacturing and these im-pacts are being most acutely felt in Victoria, the traditional home of manufacturing in Australia.

In recent years, the NSW and Victorian govern-

ments have collectively ordered more than $3.8 billion worth of rail rolling stock to be manu-factured overseas. This is equivalent to total an-nual national sales for Toyota, Holden and Ford combined. The car industry employs around 15,000 people and another 30,000 in its supply chain, and receives millions of dollars in govern-ment assistance.

Given that rail manufacturing is less automated than car-making and so has the potential to employ more people, it is clear that had this $3.8

VLocity train at Bombardier, Dandenong. Photo courtesy of Bombardier


billion of government investment stayed in Aus-tralia, it could have generated tens of thousands of jobs.

Melbourne currently has 96 thirty-five year-old Comeng trains which are nearing the end of their life, and 400 trams which do not comply with dis-ability access requirements that will need to be replaced over time.

The Victorian Government’s recent Transport Plan commits to $3.6 billion of investment in new train and tram purchases over the next four years.10 Ensuring that at least 50 per cent of this new rolling stock is manufactured within Victoria11 would create up to 2250 full-time jobs directly and 5400 to 6300 full-time jobs indirectly in the supply chain.12

Industry figures point to the “outstanding suc-cess” of Bombardier’s VLocity train built at Dan-denong, which has a local content level of over 70 per cent, as evidence that Victoria’s manu-facturing sector is capable of meeting Victoria’s future transport needs.13

If the Victorian Government made a long-term commitment to acquiring 40 new trams each year for the next 10 years, it would:

increase annual output of Victorian manu-facturing by $120 million per year;

generate a further $87 million in supply chain activities per year;

provide direct employment for 150 full time employees for a period of ten years and an additional 450 employees in the supply chain; and

add $605 million worth of value over the life of the contract.14

Realising these economic and employment ben-efits, however, depends on the government mak-ing a commitment to local manufacturing and taking a more strategic approach to planning for future investment. A viable local manufacturing sector requires a certain level of continuity of work in order to maintain a skilled workforce and support investment in new plant and equipment.

Manufacturing in Victoria has steadily declined in recent decades from around 35 per cent of GDP in the 1980s to just 12 per cent now. This compares with China at 70 per cent, India at more than 60 per cent, Germany at 54 per cent, France at approximately 40 per cent, UK at 24 per cent and dropping, Turkey at 16 per cent, and Bangladesh at 8 per cent.15

Once manufacturing capacity and skilled work-ers are lost, it is difficult for local manufactur-ers to bid for new work and commit to timely delivery, thus reinforcing the trend of contracts moving off-shore.

The three years of continuous work created by the original order for 76 VLocity cars manufac-tured in Dandenong generated $22 million in income for the ARM Group consortium of sup-pliers, at least $3 million in plant and equipment purchases, and full-time work for at least 70 people. In contrast, the subsequent intermittent small orders of 14, eight and finally 32 cars have led to gaps in orders and work for suppliers, leading to retrenchments and the loss of skilled employees.16

The continuity created by large orders also


allows companies to take on the extra training and supervision commitments associated with unskilled and disadvantaged job-seekers. For example, Actco-Pickering Metal Industries em-ploys 6 to 9 physically and intellectually disa-bled workers (10 to 15 per cent of its workforce) at any one time. The work associated with the VLocity contract allowed the ARM Group as a whole to employ 76 unskilled job-seekers, many of whom have since moved on to other work.17

The maintenance of a strong manufacturing capacity in Victoria has benefits not only for local jobs, but also for export earnings. With the as-sistance of the Department of Innovation, Indus-try and Regional Development and the Industry Capability Network, Victorian-based manufactur-ing firms supplying rolling stock manufacturers such as Alstom and Bombardier here in Victoria, have been successful in supplying components for the companies’ other contracts in Europe (see Success Stories).

Policy measures that would help promote this growthThe lack of a specific local content requirement for manufacturing (versus maintenance), makes the Victorian regulations weaker than their inter-state and overseas counterparts.

Recent rolling stock manufacturing contracts in Western Australia mandated a 10 per cent local content requirement with 30 per cent of the contract value in counter-trade opportunities. In-ternationally, the United States mandates a mini-mum 60 per cent local content requirement for rolling stock, the European Union 50 per cent,

China 70 per cent and Canada 25 per cent.18

Victorian local content rules should be strength-ened to require 50 per cent local content in manufacturing and 95 per cent in maintenance. As it generally costs less to maintain locally-made vehicles (because they are designed for local conditions and are less reliant on imported parts)19 it is reasonable for local bids to be eligible for a price premium on overseas com-panies.20 Local manufacturing also generates significant downstream employment and eco-nomic benefits.

The Victorian Government is proposing that the next meeting of the Council of Australian Gov-ernments (COAG) agree to undertake a national assessment of rail rolling stock and estimate fu-ture needs across the country. This would allow for a more organised process of ordering rolling stock nationally, so as to maintain a continu-ous supply of work to both manufacturers and suppliers. In particular, establishing consistent specifications for fit-out components (such as air conditioning or seats) across state boundaries would create a significantly more stable invest-ment and employment environment for a wide range of small to medium size component manu-facturing firms across Australia.

Training required to promote this growthVictoria’s rail manufacturing industry is operating within a very uncertain and unpredictable market environment due to a lack of forward planning in infrastructure investment by government and an inconsistent application of local content rules.

Justin Lievesley at work. Photo courtesy APM Industries


This unpredictability creates a fluctuating de-mand for workers and the loss of skilled trades-people when work dries up.

Rail manufacturing is a specialised field where workers with existing engineering or trades qualifications typically require significant ad-ditional training, which can cost in excess of $20,000 per worker.21 In the absence of ongoing work, companies risk losing skilled staff and the investment they have made in them, only to have to incur those costs again every time work is generated by a new contract.

As noted earlier, the rail industry is predict-ing significant skills shortages in the next five years. Because employment in this industry is generated by government investment in new rolling stock, these estimates are less likely to be significantly affected by the global economic downturn.

There is potential for workers affected by the economic crisis, such as redundant automotive manufacturing workers and Victorians returning from interstate mining areas, to transfer to the rail manufacturing industry. Victoria’s training sys-tem however, is relatively inflexible and geared towards training unskilled workers, rather than ‘upskilling’ existing workers. In a specialised field such as rail manufacturing, this means that the considerable cost of worker training is borne by individual companies.

The industry has recently outlined a strategy for tackling skills and labour shortages in the rail industry. Its recommendations address areas such as:

the need for an industry culture change;

attracting and retaining experienced staff; and

building new employment and training pathways.

Success storiesInnovonics – Export Success

Melbourne-based company Innovonics supplies digital video recording products to European rail manufacturers and currently has security sys-tems installed on trains in London and Madrid, as well as Melbourne.

As of 2005, when it won an ICN Industry Achievement Award, Innovonics had exported over $2 million worth of product and had won $10 million worth of new contracts in Europe. Innovonics uses predominantly Victorian compa-nies to manufacture its products and employs 60 staff. Source: www.icnvic.org.au

Further informationARM Group Australia: www.armgroup.com.au

Australian Rail Association (ARA): www.ara.net.au

Australian Rail Industry Corporation (ARIC): www.aric.net.au

Australian Rail Industry Network (ARIN): www.railnetwork.com.au

Industry Capability Network: www.icnvic.org.au

Victorian Industry Participation Policy: www.vgpb.vic.gov.au

Victorian Transport Plan: www.transport.vic.gov.au

Endnotes1 Australian Government, Melbourne Trains and Trams Case Study at http://www.innovation.gov.au and Industry sources

2 Bombardier (2008) Annual Report, Year ended 31 January 2008

3 Results 07-08, p. 53 at www.alstom.com

4 www.au.alstom.com/home

5 Many of these suppliers also supply the auto-motive industry

6 Procurement and Local Industry Participation (Victorian Industry Participation Policy – VIPP), www.vgpb.vic.gov.au

7 Building Our Industries for the Future: Action Plans for Victorian Industry and Manufacturing, Victorian Government 2008

8 State government sources

9 Derived from national figures published in ARA, 2008, A Rail Revolution, assuming Victoria accounts for 25 per cent of national activity. As the rail manufacturing sector in Australia has been largely driven by government policy and investment at a state level, it is reasonable to as-sume that (unlike other forms of manufacturing) the workforce is relatively evenly spread across the country.

10 Victorian Transport Plan – Overview, p. 22, Victorian Government, www.transport.vic.gov.au

11 Recent government studies have shown


ample capacity exists to manufacture at least 50 per cent of this new rolling stock within Victoria. Source: AiG (2008)

12 Assuming every $1 million of investment cre-ates approximately 5 direct and 12-14 indirect jobs, and annual investment of $450 million (50 per cent of $3.6 billion over 4 years). State gov-ernment sources

13 AiG (2008), Ai Group submission on the development of A New Victorian Industry and Manufacturing Strategy, Australian Industry Group, August 2008 and “Rail Industry Spooked by International Suppliers”, The Age, 19 Febru-ary 2007

14 Victorian Tram Rail Manufacturing Strategy, Mark II, Victorian Government 2002

15 Industry sources

16 Jill Walsh, pers. comm., ARM Group consor-tium, March 2009

17 Jill Walsh, pers. comm., ARM Group consor-tium, March 2009

18 AiG (2008), Ai Group submission on the development of A New Victorian Industry and Manufacturing Strategy, Australian Industry Group, August 2008

19 The Bombardier VLocity passenger train which has been designed and manufactured to suit local conditions has been benchmarked as the most reliable DMU (diesel multiple unit) in the world. Jill Walsh, ARM Group, pers.comm. March 2009

20 Australian Workers Union and Australian Manufacturing Workers Union are calling for a 20

per cent price premium, meaning that local bids up to 20 per cent more costly than an equivalent overseas bid would be treated equally. Source: J. Dowling and B. Schneiders (2008) “Unions and business want trains to be built here”, The Age, 15 September 2008

21 A Certificate 8 welder requires (on top of existing welding qualification) 3 years of training at 4 hours/week, 38 weeks/year at a cost of $45/hour. Jill Walsh, ARM Group, pers.comm. March 2009


An introduction to the industryAs of 2002, the energy efficiency industry na-tionwide was worth $3.8 billion and an estimated 11,200 jobs1. The water efficiency industry is now valued at $3.5 billion and employs 25,000 people nationwide2.

With ambitious environmental policies, these two industries could grow to a $190 billion energy ef-ficiency sector and a $35 billion water efficiency sector by 20303. (See Fig 1)

Currently, buildings account for nearly 30 per cent of total carbon emissions worldwide. A recent study has shown that employing cost-effective measures could help reduce these emissions by at least a third4 and create jobs5. Energy efficiency remains not only the cheapest way to reduce greenhouse gas emissions6, but is also a premium area for employment growth7.

In addition 60 per cent of Melbourne’s water (11 per cent statewide) is consumed by residential housing. The vast majority of that water is drawn from our stressed rivers. Implementing water-saving measures and replacing inefficient appli-ances can reduce household water use by up to 30 per cent.

Current policy measures have helped to make some inroads in these areas.

Building codes and planning requirements have led to energy and water efficiencies in new buildings. However, as new homes will account for just 15 per cent of Australia’s housing stock by 20208, this is not sufficient to transform our housing stock for a low carbon economy.

Government-funded community awareness and

Summary


rebate programs have achieved some success by encouraging householders to voluntarily adopt relatively simple low-cost measures (such as installation of energy-efficient light globes and low-flow showerheads). But there is a limit to the reach of voluntary programs. As other public education programs have demonstrated (eg. the wearing of seat-belts or motorcycle helmets), mass uptake requires a mix of both education and regulation.

Energy-efficiency retrofits play an important role in mitigating the impact on vulnerable commu-nities of a transition to a low-carbon economy. These communities are disproportionately af-fected by energy price rises.

Their housing and appliances are less energy efficient to begin with, and their energy pay-ments generally make up a higher proportion of their spending than the general population. Lower-income consumers are also less able to spend money to upgrade their homes. These water and energy efficiency programs help to in-sulate low-income consumers from rising prices for essential services.

This case study will focus on the potential for a mass ‘greening’ of our existing stock. Retro-fitting homes is an effective way to stimulate economic growth, as activity is shifted away from the water and energy supply industries towards sectors that can employ more workers per dollar received. These programs deliver a ‘double dividend’: direct jobs and increased economic activity arising from increased dispos-able income9.

The state of the industry in VictoriaAs of 2002 (the last date for which survey data is available), the energy efficiency industry in Vic-toria was valued at $334 million and employed 5700 people10. The industry is growing rapidly, so these figures are likely to be significantly higher. Victoria’s market for sustainable water systems is currently valued at $900 million and employs an estimated 6000 people11.

A government survey of employment in these growth industries would provide a valuable update.

Victoria’s 5-star housing standard has delivered significant energy efficiency improvements for new homes since introducted in 2004. However, an estimated 1.9 million Victorian homes built before 200412 still have energy ratings of 2-stars or less13.

Half of Victoria’s homes do not have efficient showerheads and nearly 40 per cent of houses over 30 years old still have at least one single-flush toilet14 (See Fig 2).

The 5-star standard was extended to include major renovations in 2008 (excluding the re-quirement to install a rainwater tank or solar hot water system). Allowing for an estimated 40,000 major renovations undertaken each year for the next five years15, at least 1.7 million homes remain that will need retrofitting for efficiency.

Current state and federal government policiesCurrent initiatives supporting the retrofitting of

Fig 1: Estimated industry value at 2030 – ambitious envi-ronmental policies.

From ACF/ ACTU, Green Gold Rush, 2008.

$0

$100

$200

$300

$400

Now 2030

Billi

on d

olla

rs

Energy efficiency - buildings

Energy efficiency - other

Sustainable water Biomaterials

Renewable energy Waste and recycling

Installing roof insulation. Photo courtesy Fletcher Insulation


houses in Victoria are as follows:

The Victorian Energy and Water TaskforceThe Victorian Energy and Water Taskforce started in 2002 and had retrofitted 4700 low-income homes at an annual cost of $980,000 by June 2008. An additional 8000 homes will be retrofitted by 2011. The program is delivered in partnership with the private and community sector and provides training for unemployed people. Currently it provides the equivalent of 31 full-time jobs each year. Over the life of the project, it has offered 150 traineeships with 60 per cent of trainees going on to find related work. Many have also completed TAFE training in basic construction skills.17

120

100

80

60

40

20

0

Age of dwelling in years

<1 1 to 5 5 to 10 10 to 20 20 to 30 >30

water efficientshowerhead

dual-flush toilet

single flush toilet

Fig 2: Water conservation devices by age of dwelling16 (Victoria).

The Brotherhood of St Laurence’s Energy and Water Taskforce undertake home retrofits. Photo courtesy Ross Bird


The Energy Saver Incentive

This is a state program delivering the Victorian Energy Efficiency Target, which aims to reduce residential greenhouse gas emissions by 10 per cent per year (2.7 million tonnes). Under the scheme, energy retailers surrender energy efficiency certifi-cates according to their share of sales. The scheme is expected to result in investment of $210 million in the first three years of operation18 and to create between 450 and 900 jobs19.

The Water Wise Program

This program provides free home audit and water efficiency retrofit services (up to the value of $500) to recipients of a Water Util-ity Relief Grant or householders registered with their provider’s hardship program. The program started in January 2009, with a budget of $700,000 over 4 years. To date it has retrofitted 27 households and aims to retrofit 2000 households per year (of a total of 6000 hardship customers)20.

Victorian Water Smart Gardens and Homes Rebate Scheme

Operational since 2003, this scheme pro-vides rebates for water-saving measures such as 3-star showerheads, dual-flush toilets, water-efficiency appliances, and rainwater tanks. As of mid-2008, nearly 200,000 rebates had been claimed, at a total cost of $15.4 million.

Energy efficient homes package: Home Owner Insulation Program & Low Emis-sion Renters Assistance

This federal program will operate from July 2009 until the end of 2011. Owner occupi-ers will be able to apply for grants of up to $1600 to retrofit either ceiling insulation or solar water heating. Renters and landlords will be eligible for both the insulation grant and solar rebate. The program is expected to help 2.7 million homes nationwide be-come more efficient. Currently 25 per cent of Victorian homes are without insulation. If all of these households participate in the program21, it will generate between 400 and 800 Victorian jobs. Nationally, the program is expected to create up to 20,000 jobs22.

Green Loans

This is a five year program with $300 mil-lion in seed funding. The program offers households free loans of up to $10,000 to increase the sustainability of their homes. An assessment by an approved auditor is required to access the loan.

Jobs created by this industryThe jobs created by the energy efficiency industry are embedded across a broad range of existing industries: manufacturing, construc-tion, design, heating and cooling equipment, electronics, finance and services, research and development. (See Table 1)

Jobs and skills range from highly technical ma-terials scientists working in research and devel-opment, to qualified plumbers installing rainwa-ter tanks or greywater systems, to semi-skilled

Fig 3: Estimated work hours by type, home retrofits.

Unskilled 1%Plumber 30%Electrician 3% Trained assessor 17%

Semi-skilled 49%

Retrofit activity

Skill needs

Labour (hours)

Audit Trained assessor 1

Upgrade household with CFLs

Unskilled 0.25

Weather sealing retrofit

Semi skilled 2

Ceiling insulation Semi skilled 2

High efficiency showerhead

Semi skilled 0.25

Hot water – electric to solar

Plumber 4

Hot water – electric to heat pump

Electrician 2

Fridge upgrade Unskilled 0

Dual flush toilet Plumber 3

Install tap flow controllers

Semi skilled 0.5

TABLE 1: Work involved and skills audit for home retrofit 25


handy-people doing basic house retrofits.

Residential retrofits in energy and water create large numbers of jobs in construction and allied services and are the focus of this case study. (See Fig 3)

Construction accounts for 8 per cent of employ-ment in Victoria, and residential building con-struction accounts for nearly 65 per cent of that. As a result of the global economic downturn there has been a sharp decline in new housing approvals over the last two years.

An ambitious water and energy retrofit program

as outlined below could create or safeguard 3200 to 7000 jobs23, about half of which are in the construction industry, and help alleviate the impact of the current downturn.

Home assessments for energy and water ef-ficiency are a relatively new area of work. They are the backbone of most state and federal programs to retrofit residential homes. They will be required for the new national Green Loan pro-

gram and, combined with the Energy and Water Task Force, will lead to more than 4000 audits per year in Victoria24.

Growing the industryThe energy and water efficiency industries are growing rapidly. Recent programs announced by the federal government include potential

Retrofit activity

Cost Proportion of dwellings

Audit $200 100%

Upgrade household with CFLs

$70 20%

Weather sealing retrofit $420 75%

Ceiling insulation $1,530 40%

Hot water – electric to solar $3,500 30%

Hot water – electric to heat pump

$4,000 10%

High efficiency showerhead

$95 50%

Dual flush toilet $750 20%33

Tap flow controllers 34 $40 90%

Fridge upgrade $950 15%

Average cost per dwelling $2,800

TABLE 2: Efficiency measures, costs, and proportion of dwellings

WATER SAVINGS

Percentage reduction in total

household water use

Houses with measure

Weighted average

High efficiency showerhead 15% 35 17.5

Dual flush toilet 12.5% 30 6

Tap flow controllers 4% 10 9

Average reduction per dwelling 75 32.5

GREENHOUSE GAS REDUCTIONS

Percentage reduction in total

household emissions

Houses with measure

Weighted average

Audit - - -

Upgrade household with CFLs 40% 0.6 0.12

Weather sealing retrofit 20% 0.7 0.53

Ceiling insulation 30% 1.1 0.43

High efficiency showerhead 20% 0.5 0.17

Hot water – electric to solar 70% 4.1 1.2

Hot water – electric to heat pump 70% 4.1 0.41

Fridge upgrade 15% 0.6 0.1

Average reduction per dwelling 7.5 3.0

TABLE 3: Greenhouse and water savings per house per year38, 39, 40, 41, 42, 43, 44

tonnes / household / year

KL / household / year


spending of nearly $300 million per year for the next two and a half years in Victoria alone26. This will create up to 3900 jobs27. State programs include spending of $70 million28, with the poten-tial to create another 950 jobs. However, if more ambitious programs were adopted, this could be increased to nearly 7000 jobs.

The Brotherhood of St Laurence has proposed a national program to retrofit 3.5 million low-income homes over the next seven years. The program would cost $11.2 billion and create or safeguard 6900 to 15,300 jobs nationally.

They propose that permit sales from the federal Carbon Pollution Reduction Scheme be used to pay for the program. Modelled by KPMG, the program would reduce electricity bills by an av-

erage of $313 to $470 per household, protecting low-income earners from energy price rises29. If adopted, nearly 900,000 homes in Victoria could benefit30.

In a recent report commissioned by Environ-ment Victoria, the Nous Group identified areas where deep cuts to Victoria’s emissions could be made31. One of the largest opportunities identi-fied was in a green makeover of Victoria’s entire building stock. The potential reduction from this makeover was 8.7 million tonnes of greenhouse gas by 2020.

In a follow-up study, Environment Victoria con-cluded that a targeted program to install water-efficient fittings in 5 per cent of Melbourne’s homes each year, when combined with a phase-

out of inefficient water-using appliances, could save up to 20 billion litres a year by 2012 and up to 105 billion litres a year by 202532.

By combining elements of the Brother of St Laurence proposal and Environment Victoria’s studies, we have been able to model the emis-sions reductions, water savings and jobs crea-tion that would result from a concerted effort to green Victoria’s existing housing stock.

We propose that 1 million homes – half of Victoria’s existing housing stock – be retrofit-ted for energy and water efficiency in the next five years.

Measures would include household audits, up-grading households with CFLs, weather sealing retrofits, ceiling insulation, installation of solar hot water systems or heat pump systems, installa-tion of high efficiency showerheads, dual flush toilet systems, tap flow controllers and fridge upgrades. (See Table 2 for more detail)

These are the measures outlined in the proposal by the Brotherhood of St Laurence35 with minor modifications36, with the addition of dual-flush toilets and tap controllers. Washing machine up-grades for low-income families are not included, though these would provide additional water and energy savings.

The average cost per retrofit would be $2800.

Each household would be audited by an ap-proved energy and water assessor, to ensure that appropriate measures are being taken and to talk with householders about energy and wa-ter efficient behaviour.

We have calculated the greenhouse emission

Annual spend $ million

Program length - years

Estimated full time jobs

PROPOSED PROGRAMS

Retrofit half Victoria’s homes (water and energy) over 5 years

$556 m 5 3,100-6900

Brotherhood of St Laurence Low Income proposal45

$193 m 7 1,700-3,800

CURRENT PROGRAMS

Energy efficient homes (insulation) $64 m 3 400-800

Energy efficient homes (water heating) $219 m 3 1,300-2,900

Energy and water task force $2 m 3 10-20

Energy Saver Incentive $70 m 3 420-920

Green Loans $15 m 5 90-200

Total for current programs: 2,200-4,820

TABLE 4: Employment from energy and water efficiency programs in Victoria


and water savings of each measure, as well as the weighted average savings to be made for households in the retrofit program. These sav-ings come to 3 tonnes of greenhouse gas and 32,500 litres of water per retrofit per year.

Employment has been calculated from the estimated annual spending for the program, excluding the cost of fridge upgrades as the labour involved for this measure is negligible37. (See Table 4)

Retrofitting half of Victoria’s existing homes by 2015 in this way would cost $556 million per an-num and create between 3100 and 6900 jobs. It would reduce greenhouse gas emissions by more than 3 million tonnes and save 32,500 megalitres (ML) of water each year. (See Table 3)

If this was extended to half the national hous-ing stock, it would reduce Australia’s emissions by 11.9 million tonnes, reduce water use by 130,000 ML and create up to 27,800 new jobs.

Under this proposal, the current commitment to spend $370 million per annum upgrading Victo-rian homes would be increased to $556 million. (See Table 4)

Policy measures that would help promote this growthSubstantial jobs creation, as well as energy and water savings, would result from a concerted effort to retrofit Victorian households as outlined above. There has never been as much support for household energy and water ef-ficiency measures, with large amounts of fed-

eral spending coupled with existing Victorian programs. To make the most of the opportunity it is important to coordinate existing and new programs and set overarching policy goals.

A mass upgrade for water and energy efficiency will require a mix of incentives for voluntary ac-tion, targeted programs and regulatory mea-sures.

Environment Victoria suggests that the Victorian Government adopt an ambitious but achiev-able goal of retrofitting half of Victoria’s housing stock over the next five years. As outlined in previous sections this would require investment of $556 million per year. However $370 million has already been allocated to existing Victorian efficiency programs, or is available from Com-monwealth schemes. The outstanding $230 million per year could be met by a combination of government and private investment, the exact mix being determined by the policies used.

Environment Victoria recommends that the state

government adopt the following mix of pro-grams:

1. Fully financed retrofits for low-income households

Funded by packaging together existing state and federal programs and providing additional state allocation for coordination and a ‘one-stop-shop’ approach to the program. Streamlining programs into one delivery mechanism would avoid a piece-meal approach where, for example, light-globes are changed under one program and showerheads under another. A broad definition of low-income households should be used in line with the model proposed by the Brotherhood of St Laurence to deliver economies of scale and significant water and energy savings.

2. Bundling together incentives pro-grams for higher income households

For higher income households there is also

Country Study or Project Description Cost (Au$) Jobs

Germany Program The German Alliance for Work and the Environment $36 billion 140,000

European Union Proposal European Trade Union Confederation Study: 75% reduction of CO2 emissions in the residential building sector (proposal)

$5,975 billion 2.5 million by 2030

United States Proposal Apollo Alliance Study: financing for green buildings, tax in-centives, investing in research and development, and promoting new building codes and standards (includes commercial and residential buildings).

US$89.9 billion 827,260

UK Program Warm Front – has assisted more than 1.7 million house-holds since 2000. Comprehensive program for low income house-holders in England. Similar schemes operate in Wales and Scotland

Annual funding ~ $700 m47

No information

TABLE 5: Selected retrofitting programs and proposals around the world


a need for greater coordination of pro-grams. The Green Loan fund scheme start-ing in July 2009 is well placed to provide significant support for a retrofit program, however, incorporating incentives under VEET and providing streamlined delivery mechanisms (eg. street-by-street retrofit programs) would maximise the benefit from existing programs and deliver economies of scale.

3. Regulatory standardsThe simplest way to deliver a renovation rescue package would be to require all homes to meet acceptable environmental performance at the time of sale or lease. These standards could be introduced over the next 12 months and then progressively tightened over the next five years, as we build the workforce and skills necessary to retrofit our entire building stock.

Regulatory standards at point of sale spreads the responsibility for improving our building stock across the whole com-munity. It removes the split incentive that sees many renters living in homes with poor energy and water efficiency while having minimal ability to invest in environmental measures. It would also reach high income, high consumption households that may not access voluntary rebate programs.

A performance-based standard would give homeowners the flexibility to choose the most cost-effective mix of measures to help them save water and energy. The proposed program could create additional employment benefits in


areas such as the rainwater harvesting industry, which is not included as one of the measures modeled in this case study.

At current rates of home sales, 50 per cent of Victoria’s housing stock would be upgraded within ten years. A combination of improved rebate and loan schemes as outlined above would encourage home-owners not planning to sell to upgrade and reap the benefits of efficiency improve-ments.

A staged approach to retrofitting Victoria’s existing housing stock at point of sale or lease could be implemented, as follows:

water and energy use of all dwellings sold or leased required by 2009/10;

-mum performance-based standards for water and energy use from 201146; and

tightened between 2011 and 2020.

Training required to promote this growthEnergy efficiency programs have the potential to create thousands of jobs, many of which would be delivered locally. More than 40 per cent of these jobs are likely to be semi-skilled, open-ing up opportunities for unemployed workers and providing training that leads to meaningful employment.

Retrofits will also create work for skilled trades-

2006/07 2007/08 % Decrease

TABLE 6: Australia’s Rainwater Harvesting Industry Photo courtesy Suzie Brown

Aust.48 Vic. Aust. Vic. Aust. Vic.

Employed (,000s)

Direct 4,500+ 1,12549 3,000+ 97550 33% 14%

Indirect 13,000+ 3,250 10,000+ 2,65051 23% 19%

Industry turnover $1.30 b $325 m $800 m $27652 39% 15%


people and help safeguard jobs under threat from a global economic slowdown.

The Victorian plumbing industry has estimated that an additional 2000 to 4000 plumbers will be needed in Victoria to meet the demand created by government sustainability programs58. Meet-ing the needs of existing federal government sustainability policies alone will require at least 500 extra plumbers a year in Victoria over the next four years (See Table 7). Skills shortages are already being experienced in the implementa-tion of the new EPA requirement for high water using commercial and industrial sites to imple-ment Environmental Resource Efficiency Plans.59

Although almost 2000 plumbers are trained annually in Victoria, the total workforce remains

almost static due to retirements and departures from the industry60. The number of plumbers skilled in ‘green plumbing’ acts as an additional barrier to widespread water and energy effi-ciency.

Since its inception in 1999, nearly 4000 Victorian plumbers have completed one or more modules of the GreenPlumbers® training program. While Victoria is leading the way in green plumb-ing training (almost half of the 7400 plumbers trained nationally are Victorian)61, more than 80 per cent of Victoria’s plumbers still have no train-ing in sustainable plumbing practices.

A key policy change that could help drive train-ing in this area is the introduction of a compul-sory continuing professional development (CPD)

scheme. Green plumbing could also be includ-ed in standard plumbing apprenticeship cours-es, rather than being treated as an ‘add on’. The current Council of Australian Governments (COAG) process to streamline plumbing appren-ticeship courses nationally provides a perfect opportunity to incorporate these sustainability issues into training62.

Substantial effort and investment will be required to meet the scale of the programs proposed. While most immediate training needs can be fulfilled through existing courses or those cur-rently under development, additional resources may be needed to ensure sufficient places are available. As the industry progresses, additional modules will need to be developed for standard trade courses.

Existing energy and water efficiency training programs include:

courseThis 80 hour course was developed by Sustainability Victoria and Homesglen TAFE, and accredited in January 2008. The course has been licensed to 30 training providers in NSW, WA and Victoria.

It was developed to fill the gap identified by the Energy and Water Taskforce program, as no existing training covered this area. There are no formal pre-requisites and the course offers an entry point for unemployed people to re-enter the workforce. However, entrants vary from unskilled (with no formal qualifications) to licensed plumbers, electri-cians, and thermal assessors.

TABLE 7: Commonwealth Government policies and plumbing labour needs in Victoria

National Sustainability Policy Rebate, loan or funding per project

Target no. projects

Estimated target no. Victorian projects

Estimated average plumber days per project

Plumber days per policy

FTE plumbers per policy p.a. assuming 4 year implementation

Rebates for home greywater & rainwater tanks

$500 500,000 125,000 1.0 125,000 142

Low interest loans for solar, water & energy saving

$10,000 200,000 50,000 3.0 150,000 170

Water & energy efficiency & solar panels in schools

$50,000 9000 2,250 10.0 45,000 26

Rebates for solar & heat pump hot water services

$1000 25,000 2.0 100,000 114

Phase-out of electric hot water services by 2012

100,000 0.5 50,000 56

Total 508


Modules will be developed to support the federal government’s Green Loans program and to specifically cover audits for low and high-income consumers. The Master Plumbers and Mechanical Services Association is also considering incorporat-ing some modules into licensed plumbing courses, as they see this as a valuable ad-ditional skill for their members.

Sustainability Victoria and Holmesglen TAFE are developing a home retrofitting course, expected to be completed by mid 2009. The course will run for 20 hours and teach basic repair skills. It will equip people to safely undertake weather seal-ing, change shower roses,and tap washers, and identify jobs that require trades people. The course has no trade pre-requisite and is intended to be a supplement to the as-sessor course.

The GreenPlumbers® association delivers training to licensed plumbers nationally, with modules covering solar hot water, inspection reports, and water efficiency technology. These courses are provided free of charge and to date 7400 plumbers across Australia have completed one or more module (3384 in Victoria).

The National Electrical and Communica-tions Association (NECA) runs 20 hour courses on electrical energy efficiency for licensed electricians. The course includes

modules on lighting, energy management, pumps, fans and motors, and solar genera-tion, heating and cooling. Once success-fully trained, electricians and contractors who employ them may use the Ecosmart label. Certification is only valid for a year, so electricians who undertake training have an incentive to stay up to date. So far 1000 people have completed the course.

Success storiesFletcher InsulationFletcher Insulation is a national company that makes insulation batts and foil. Fletcher has factories in Dandenong (Victoria), Rooty Hill (NSW) and Homebush (NSW), and a distribution depot at Braeside (Victoria). Their Dandenong factory is the largest glass wool production facil-ity in the southern hemisphere, producing more than 80 tonnes of glass wool a day. Their annual turn-over in Victoria is $60 million and nationally it is $220 million. They employ 120 Victorians (400 nationwide). Fletcher Insulation expect their business to grow by up to 25 per cent as a result of the recent Energy Efficient Homes Package, creating some 15 to 20 new Victorian jobs and up to 100 new jobs nationally. About 75 per cent of the jobs are related to production (production line, packaging and transport) and 25 per cent are in either maintenance, management and administration or distribution.

Fletcher Insulation is committed to process as well as product energy efficiency: they devel-oped and installed new INTECH furnaces in 2007, which reduced energy consumption by half and set a benchmark for world’s best prac-

tice in glasswool furnaces. The INTECH furnac-es are now being sold to insulation manufactur-ers around the world.63

Further informationEnergy efficient Homes Package, Homeowner Insulation Program, Low Emissions Plan for Renters: www.environment.gov.au/energyef-ficiency

Green Loans Program: www.environment.gov.au/greenloans/index.html#about

Energy and Water Task Force: www.sustainabil-ity.vic.gov.au/www/html/1464-energy-task-force.asp

Sustainability Victoria: www.sustainability.vic.gov.au

Greenplumbers www.greenplumbers.com.au

Ecosmart electricians: www.neca.asn.au/index.php?option=content&task=view&id=777

Our Water Our Future: www.ourwater.vic.gov.auTurning it Around: Climate Solutions for Victoria: www.environmentvictoria.org.au

Water Security, Healthy Rivers: Environment Victoria’s Vision for Melbourne: www.environmentvictoria.org.au

KPMG (2008), A national energy efficiency pro-gram to assist low income households, KPMG, Brotherhood of St Laurence and Ecos, Septem-ber 2008:

http://www.bsl.org.au/pdfs/KPMG_national_ener-gy_efficiency_program_low-income_households.pdf


Endnotes1 Mark Ellis and Associates (2003), the Austral-ian Sustainable Energy Survey 2002. Estimat-ing the Contribution of the Sustainable Energy Industry to the Australian Economy. Published SEDA.

2 Australian Conservation Foundation, Austral-ian Council of Trade Unions (2008). Green Gold Rush. How ambitious environmental policy can make Australia a leader in the global race for green jobs. Page 19. US$ converted to Au$ using exchange rate on 3 April 2009 of US$1:Au$1.4.

3 Op cit 2, Figure for energy efficiency includes Green Buildings.

4 Diana Ürge-Vorsatz and Aleksandra Novikova. 2008. Potentials and Costs of Carbon Diox-ide Mitigation in the World’s Buildings. Energy Policy, Vol. 36 (2008), pp. 642–61

5 Intergovernmental Panel on Climate Change (IPCC), Climate Change 2007: Mitigation of Climate Change 2007, Contribution of Working Group III to the Fourth Assessment Report of the IPCC (Cambridge, UK and New York: Cam-bridge University Press, 2007), p. 389.

6 For example, McKinsey & Company 2008, An Australian cost curve for greenhouse gas reduc-tion, www.mckinsey.com/mgi

7 Op cit 2

8 Based on ABS Population projection Series II, household projection for 2020 compared to 2008

9 United Nations Environment Program. 2008. Green Jobs. Towards decent work in a sustain-

able, low-carbon world. Page 10.

10 Op cit 1

11 Derived from national figures in ACF and ACTU (2008) Green Gold Rush, Australian Con-servation Foundation and Australian Council of Trade Unions, Melbourne, assigning 25 per cent of national employment and turnover to Victoria. These figures include revenue and employment related to the agricultural water sector.

12 Homes built prior to 2004, from ABS. 2004. 3236.0, Household and family projections Aus-tralia 2001 to 2026, Commonwealth of Australia, 2004, page 82.

13 Department of Sustainability and Environment (2006), Energy Efficiency Action Plan, page17

14 ABS (2007) Environmental Issues: People’s Views and Practices, Publication 4602.0

15 Victorian Government media release, Wednesday, 24 October, 2007; 5-star boost to sustainability for home renovations

16 ABS, 2007, Environmental Issues: People’s views and practices- 4602.0

17 Katrina Woolfe, Personal communication., March 24th 2009

18 Department of Primary Industry, Victoria. 2007. Victorian Energy Efficiency Target (VEET) scheme fact sheet

19 Jobs are calculated according to annual investment. Three reports or programs are used for this estimate. The higher end of the range is the projection from the German Alliance for Work and the Environment which is the largest

residential retrofit program for which there is data (general information about program op cit 9, commitment and jobs for future years from German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), Question and Answer: Energy Efficiency Tips for Buildings and Heating, www.bmu.de/english/energy_efficiency/buildings/doc/38270.php , updated October 2006; the lower end from one of the three residential energy efficiency job fac-tors reported in Wade J et al (2000) National and local employment impacts of energy efficiency investment programmes. Data from the last sur-vey of the Australian industry (MEA 2002, op cit 1) falls in between.

Study/ programme

Original currency

Jobs per Au$m

German Alliance for Work and the Environment

Euro 13.2

Wade J et al, 2000 (information)

Euro 7.4

Wade J et al, 2000 (fiscal action)

Euro 7.1

MEA for SEDA 2002 Au$ 6.7

Wade J et al, 2000 (regulatory action)

Euro 5.9

20 Cheryl Roche, Personal communication, De-partment of Human Services, March 2009

21 Owner occupiers can either access the grant for solar or the grant for insulation, but as there are state government rebates for solar water heating, it is reasonable to assume that the insu-lation grant would be accessed by preference. Landlords and renters may access both.


22 Based 2.7 million homes multiplied by grants of 1600 per home, which equates to $4.3 billion over 3 years. Job multipliers as per note 19.

23 Based on retrofitting half of Victorian houses for energy and water efficiency over the next 5 years. Job calculations as per note 19.

24 This estimate is based on Victoria getting one quarter of the Green Loan total amount, and assumes that all householders borrow the full $10,000 dollars.

25 Hours have been estimated for this case study.

26 This assumes that Victoria secures propor-tionate spending to the number of houses in the State. Programs include the Energy Efficient Homes Package and the Green Loans package.

27 See note 19 for explanation of jobs calcula-tion.

28 Funding for the Energy and Water Task-force of $5.6 million for the three years 2008/9 to 2010/11 (personal comm. Katrina Woolfe, March 24th 2009), funding for the Energy Saver Incentive $210 million over first three years, from Department of Primary Industries, 2007. Fund-ing for Water Wise program of $0.7 million over 4 years (Cheryl Roche, DHS, Pers. Comm. March 2009). Estimated Impacts of Victorian Energy Efficiency Target scheme Fact sheet

29 KPMG (2008), A national energy efficiency program to assist low income households, KPMG, Brotherhood of St Laurence and Ecos, September 2008

30 Assuming one quarter of low income house-

holds are in Victoria.

31 Nous, Environment Victoria, 2008, Turning it Around, available at www.envict.org.au

32 Environment Victoria. 2008. Water Security, Healthy Rivers: Environment Victoria’s Vision for Melbourne, www.envict.org.au

33 Estimated from ABS. 2007. Environmen-tal Issues survey, Publication 4602.0. This is conservative because the high cost of replace-ment is likely to mean a greater proportion of low income households still have a single flush toilet.

34 Costs are estimated at: $4 each, 12 taps per household. The proportion of homes needing controllers is estimated from ABS (2007) Envi-ronmental Issues survey of water saving modifi-cations in bathroom (6 per cent) and kitchen (1 per cent)

35 Op cit 29, Table 1.4

36 Modifications include: 1) Light bulb replace-ment is restricted to the first three years of the scheme, as incandescent lightbulbs are to be phased out from 2010. 2) Retrofitting of solar water heating or heat pump water heating is reduced to 30 per cent and 10 per cent rather than 40 per cent and 15 per cent. 3) Fridge upgrades are reduced from 17 per cent to 15 per cent, as it is assumed these would only be available to low income households.

37 See note 19 for explanation of employment calculations.

38 The percentage savings for insulation and weathersealing come from SEAV 2002. Insu-lating your home (Typical heat losses in unin-

sulated home). The percentage savings from CFLs come from National Framework for Energy Efficiency Background Report (V4.1) Preliminary Assessment of Demand-Side Energy Efficiency Improvement Potential and Costs, Table 5.1. The percentage savings from efficient showerheads is from MEA 2003 Energy smart urban solutions. Final report to Landcom, May 2003. Page 30.

39 The end use emissions except other than water heating are from GWA. 2008.Victoria’s Greenhouse Gas Emissions 1990, 1995, 2000 and 2005: End-use allocation of emissions. Report to the Department of Sustainability and Environment by George Wilkenfeld & Associates Pty Ltd February 2008. Page 82

40 High efficiency shower saving are from DSE Our Water Our Future at www.ourwater.vic.gov.au

41 Solar or heat pump installations in the retrofit program are assumed to be replacing electric immersion heaters. Emissions are calculated from the medium energy use (medium water usage) for electric storage heating in Themal Design Ltd. 2007. Annual energy use of domes-tic water heaters. Prepared for the Australian Greenhouse Office, August 2007 (15,960 MJ), multiplied by the Victorian emissions coefficient of 1.32 tonnes per MWh from Department of Climate Change. 2008. National Greenhouse Accounts (NGA) Factors. Commonwealth of Australia October 2008.

42 Percentage household water use reductions based on average household water use of 240 KL per year. DSE (2008) H2OME: A guide to permanent water savings in your home


43 Water savings for installation of 3 star shower head and replacement of single flush to dual flush toilet from Department of Sustainability and Environment, Our Water Our Future at www.ourwater.vic.gov.au

44 Water savings for tap flow controllers from www.sustainablehomes.vic.gov.au.

45 Assigning one quarter of spending and jobs to Victoria.

46 In situations such as mortgagee sales where the owner may not be in a position to afford necessary improvements, the property could be sold with the responsibility to achieve the required environmental savings transferred to the purchaser.

47 GBP 350 million

48 All national figures in this table sourced from ARID (2008) Implementation of a Sustain-able National Urban Water and Energy Savings Program, Australian Rainwater Industry Develop-ment Group, www.arid.asn.au

49 Victorian figures in this column estimated from ABS. 2007. Environmental Issues: People’s Views and Practices, Publication No. 4602.0, Table 3.7, indicating that Victoria represents 24.5 per cent of Australia’s market for domestic rainwater tanks. It is acknowledged that not all tanks installed in Victoria will have been manu-factured here.

50 Based on industry estimate that 150 jobs have been lost in Victoria since 2007. Source: Australian Rainwater Industry Development Group (ARID)

51 Based on 1:3 ratio for direct to indirect jobs. Source: ARID

52 Assuming decrease in turnover consist-ent with 15 per cent decrease in employment. Figures are estimates only as Victorian tank manufacturers do not sell exclusively within the Victorian market.

53 David Beattie, Personal communication, Na-tional Sales Manager, Tankmasta, March 2009

54 Water tanks connected to toilet and/or laun-dry capture a much greater proportion of total rainfall, as they fill and refill several times per year, unlike tanks used solely for garden water-ing which typically stay full over winter.

55 Rebate data sourced from Department of Sustainability and Environment, March 2009. It is acknowledged that actual figures may be higher as not all householders with tanks will have claimed a rebate. However, it is likely that because of the higher costs, the majority of households with a tank plumbed for internal use will have claimed a rebate.

56 Australian Rainwater Industry Development (ARID) Group advocates a national ‘roadworthy certificate’-type scheme whereby homes are required to meet minimum standards for water efficiency at point of sale or lease. ARID advo-cates retrofitting 90 per cent of homes over a seven to nine year period. Source: ARID (2008) Implementation of a Sustainable National Urban Water and Energy Savings Program, www.arid.asn.au

57 David Beattie, Australian Rainwater Industry Development Group, Pers. Comm. March 2009

58 PIC (2008) PlumbSmarter: The path to a greener plumbing industry. Sustainability Skills Package, Victorian Plumbing Industry Commis-sion



61 Green Plumbers at www.greenplumbers.com.au

62 Gary Workman, Industry Development Manager, The Master Plumbers and Mechanical Services Association of Australia (MPMSAA), personal communication, March 2009

63 Fletcher Insulation. 2007. Briefing note for the Hon. John Thwaites MP, Deputy Premier and Minister for the Environment, Water, and Climate Change - 22 May 2007.


An introduction to the industryThe recycling industry recovers discarded prod-ucts and packaging, and reprocesses them into a raw material. Also called resource recovery, the recycling industry has two distinct parts:

The collection and sorting of materials

The reprocessing of those materials

The material collected is recorded according to its source: Municipal, Commercial and Industrial (C&I) or Construction and Demolition (C&D) waste.

What is not considered in this case study is the reuse industry. Reuse is essentially the sale or donation of second-hand goods. It is relatively small in comparison to the recycling industry and also unconventional. The supply is relatively arbitrary, goods are often donated and much of the labour is unpaid. Given the nature of the industry, reuse remains largely unreported.

From an environmental perspective, it is better to reuse products and packaging than it is to re-cycle them. Reuse is second only to avoidance on the waste hierarchy adopted by the state government1.

The state of the industry in VictoriaIn Victoria, there has been dramatic growth in the recycling industry over the past 20 years. This has been underpinned by the rollout of kerbside recycling, which has given security to investment in collection infrastructure and Mate-rial Recovery Facilities (MRF’s). Until recently the boom in commodity prices had also propelled

growth in the industry. Both of these condi-tions have existed alongside a corresponding increase in public consciousness about the importance of recycling. (See Fig 1)

It has been estimated that approximately 1850 Victorians were employed in the transportation of recycled material in 2004/05, with another 2060 employed in sorting recycled materials. This represents $270 million and $562 million worth of annual turnover respectively2.

Over 90 per cent of material recovered within Victoria is processed within the state3. It is estimated that there are another 2620 people in Victoria directly employed in the reprocessing of materials, accounting for more than $2.76 billion worth of economic activity4.

Local government and private enterprise are

Summary

The Waste HierarchyEnvironment Protection Act (2001)

Avoidance

Reuse

Recycling

Recovery of energy

Treatment

Containment

Disposal

0

1

2

3

4

5

Mill

ions

/ Ton

nes

per Y

ear Recovered

(tonnes)Landfilled(tonnes)

��Municipal paper and cardboard, plastics, glass, organic waste, etc

��Commercial & Industrial paper and cardboard, metals, organic waste, concrete and rubble, etc

��Construction & Demolition concrete and rubble, metals, building material, etc

Fig 1: Volumes and diversion rates according to sector, Victoria. Victorian Recycling Industries – Annual Surveys, Sustainability Victoria 2006-2007.


the two most significant employer groups and are estimated to employ 25 per cent and 75 per cent of the industry respectively5. Local councils are directly involved in the Victorian recycling industry as operators of transfer stations and, in a limited number of cases, as owners of collec-tion services. The majority of collection services, MRFs, and reprocessing facilities are private sector concerns. (See Table 1)

Current state and federal government policiesIn Victoria, the state government is responsible for regulations and guidelines regarding the collection, disposal and recycling of waste. This includes setting the landfill levy and establishing landfill bans on particular waste streams.

The state government also has a role in setting metropolitan and statewide policies and strate-gies. The Towards Zero Waste Strategy7 sets four statewide targets:

generated (reported as total solid waste generated)

Electronic waste collection facility. Photo: Environment Victoria

Company Recycling business

Alex Fraser Group C&D collection, recycling and reprocessing

CityWide6 municipal collection

J.J.Richards all sector collection and mu-nicipal and C&I MRFs

National Recycling Group

C&D collection and recycling

SKM municipal and C&I MRFs

SIMS Group metal recycling and reprocess-ing

SITA all sector collection and green waste reprocessing

Thiess all sector collection and MRFs

Transpacific Industries all sector collection and green waste reprocessing

Veolia all sector collection and green waste reprocessing

Visy municipal and C&I collection, MRFs and reprocessing

TABLE 1: Major non-government employers in the Victorian recycling industry


-covered for reuse, recycling and/or energy generation

- Municipal waste (65 per cent) - Commercial & industrial waste (80 per cent) - Construction & demolition waste (80 per cent)

behaviour from 2003 levels.

The federal government has no direct jurisdic-tion over the provision of recycling services in Australia.9 However, it recently released a dis-cussion paper for the development of a national waste policy, with the support of the Environment Protection and Heritage Council (EPHC).10 The national waste policy will have no direct power, but rather seek to be “a framework of guiding principles and relevant strategies.” (See Table 2)

Jobs created by this industryThe technology, facilities and machinery used in the recycling industry have undergone signifi-cant change in recent years. This has changed the nature of work in the industry and has also, in most cases, improved the safety of workers.

Bin collection used to involve a lot of manual lift-ing and often dangerous and injurious practices. Bin lifts are now almost all hydraulic and a col-lection workers’ primary job is as a truck driver.

MRFs have also become much more automated. Again, this has eliminated a lot of dangerous and injurious practices.

To date, automation has not been at the expense of local employment levels as the volumes handled have increased dramatically over the same period. The sorting and process-

ing of recyclate (recyclable material), however, is on the cusp of another technological revolu-tion. In future, engineers will be required for the design, construction and oversight of new MRFs

Landfill levy

Landfill ban

Product stewardship

Waste and recycling targets

Waste management strategy

Household hazardous waste collection

ACT YES NO NO NO YES NO

NT NO NO NO NO Under development

NO

NSW YES NO Legislation allows for EPR but no schemes in place

YES YES YES

QLD NO Limits on number of tyres allowed in new landfills

NO Under consideration

New strategy under development

NO

SA YES Considering a ban on a range of materials to landfill

Beverage containers

YES YES YES

TAS NO Whole tyres and untreated clinical waste. From 30 June 2009, controlled wastes unless landfill is approved to accept such material

NO Considering waste reduction goals and targets

Under development

NO

VIC YES Automotive batteries, whole tyres and some other wastes

Batteries, computers and paint.

YES YES YES

WA YES NO NO YES YES YES

TABLE 2: State and territory waste management and resource recovery measures8


and reprocessing facilities.

Growing the industryThe recovery rate for total solid waste in Victo-ria now stands at 62 per cent. Yet Victoria still sends approximately 3.9 million tonnes to landfill each year: a figure that has remained relatively unchanged for 15 years.11 (See Table 3)

A commonly used rule of thumb is that ‘incin-erating 10,000 tonnes of waste creates one job; landfilling 10,000 tonnes of waste creates six jobs; and recycling 10,000 tonnes of waste creates 36 jobs”12. Using this rule of thumb, and assuming no change in the total amount of waste generated, if Victoria were to increase its recovery rate from 62 per cent to 80 per cent,13 925 additional jobs would be created in the sort-ing of recyclate.14

The above projection is for jobs growth in collec-tion and sorting only, and does not include the potential for growth in reprocessing. Assuming the same ratio of jobs in reprocessing, then an increase in total recovery rate to 80 per cent would create another 1175 jobs in the reproc-

essing of recyclate.15

These are conservative estimates for prospec-tive jobs growth in the recycling industry.

Until now, growth in the recycling industry has largely been in the material streams that are easiest to collect, sort and reprocess. Future increases in the recycling rate will necessarily involve the recycling of material streams that are more difficult to collect, sort and/or reprocess. Put another way, there is the potential for even greater employment growth in ‘high tech’ re-

Collection

Sort ing

Reprocessing

Indirect

Fig 3: Existing jobs in Victoria’s recycling industry.

Rick at work at SKM Recycling. Photo: Environment Victoria

[F1] Recycled material Landfill material

1993 1.3 4.1

1994 2.1 4.0

1995 2.6 3.9

1996 3.1 3.9

1997 3.0 4.4

1998 3.2 4.2

1999 3.2 4.3

2000 3.7 4.3

2001 4.1 4.6

2002 4.4 4.2

2003 5.1 4.5

2004 5.4 4.5

2005 6.1 4.1

2006 6.2 3.8

TABLE 3: Total volume and diversion rates, Victoria

Various reports by Sustainability Victoria.


source recovery areas, such as electronic waste (e-waste) recycling.

By weight, e-waste is a relatively small com-ponent of the waste stream. The recycling of e-waste, however, is labour intensive because of the size, complexity and value of the compo-nentry.

Ireland has a similar population and economic profile to Victoria and so provides a good point of comparison.16 Since a comprehensive e-waste recycling program was introduced in Ireland, 200 direct jobs have been created.17 Extrapolat-ing from the Irish experience, if Victoria were to achieve the same rate of e-waste recycling, another 210 new jobs would be created.

Policy measures that would help promote this growthFurther growth in the recycling industry relies on an increase in the rate of recycling. Increased recycling hinges on two main things: simple and convenient collection systems, and incentives to divert material from landfill.

Each Victorian is responsible for the generation of two tonnes of solid waste per annum.19 If the world’s population consumed resources at the same rate, almost four planets would be needed to sustain us.20 Reducing materials consump-tion is the easiest and surest way to reduce this footprint and avoid waste.

It is important to recognise, however, that reduced consumption would have an adverse effect on the recycling industry unless recycling rates increased at the same rate.

Policy measures that would increase recycling include:

for CBD businessesIn the main, C&I waste collection is ar-ranged through a contract between indi-vidual business and a collection company. In many cases, businesses are unable to afford or coordinate more than one collec-tion service. Consequently, many business-es have only one bin, which goes to landfill, and they recycle very little.

A universal service for CBD businesses (as provided for households) would cut the cost of garbage collection by as much as 74 per cent and the cost of recycling collection by as much as 87 per cent.21 A universal collection would provide the

opportunity for multiple bins collections, shared between businesses, which would dramatically improve recycling rates.

Despite the reach of kerbside recycling in Victoria, over 109,700 tonnes of bever-age packaging per annum remains unre-cycled.22 The recycling rate of beverage packaging in Victoria is estimated to be just over 50 per cent; a figure which is dragged down by a poor ‘away-from-home’ recycling rate of 19 per cent.23

Container deposits have proven an effec-tive incentive for people to increase recy-cling rates and to stop littering. California has had container deposits in place since 1987 and, after recent improvements in their scheme, now has an overall beverage

Existing Jobs New Jobs* Total Growth

Direct Jobs Collection 1,850 0 1,850 0%

Sorting 2,060 925 2,985 24%

Reprocessing 2,620 1,175 3,795 45%

E-waste ** 210 210

Total 6,530 2,310 8,840 35%

Indirect Jobs*** 16,595 5,875 22,470

TABLE 4: Prospects for job growth in the recycling industry

* Assuming a resource recovery rate of 80 per cent for non e-waste items and no increase in the total solid waste collected.** Existing employment in e-waste recycling is estimated to be below 50 people. A number has not been entered here as it is likely that the calculation of existing employment in sorting and reprocessing includes some of the existing employment in e-waste.*** Assuming the same rate between direct jobs and indirect jobs as stated in Australian Recycling Values – a net benefits assessment, ACOR, 2008.


recycling rate of 76 per cent.24 An increase to this rate of beverage packaging recy-cling in Victoria would yield 56,000 addi-tional tonnes of recyclate.

Most local governments offer a hard waste collection system, either annually or on-call, for household items not suitable for kerb-side collection. However, recycling from hard waste collections is typically restricted to metal recovery.

The introduction of container deposits would also provide a trigger for the crea-tion of local recycling hubs for household items not suitable for kerbside collection. In many cases, these hubs could be located at existing transfer stations and would allow greater sorting of previously unrecovered materials, such as e-waste, paint and timber.

The major greenhouse liability associated with waste management practices in Victo-ria is the generation of methane in landfill.25 Improved recovery and management of organic material could deliver a 5 per cent reduction on national net greenhouse gas emissions.26

Currently there is no restriction on the dis-posal of organic material to landfill in Vic-toria. In the USA, 23 states have imposed some form of restriction on the disposal of organic material. The Canadian province of Nova Scotia placed an outright ban on disposal of all organics to landfill in 1999.27

In the EU, the European Council’s 1999 Landfill Directive requires member states to reduce the disposal of organic material to landfill by 65 per cent by 2020.28

The Victorian Government has signalled its support for the development of a number of organic waste digestion facilities through-

out metropolitan Melbourne.29 Such fa-cilities would be able to process existing municipal green waste with the addition of food waste collected in the same bin and from C&I sources. However, these facilities are unlikely to be attractive to municipal or C&I sources unless disposal to landfill is either restricted or made cost prohibitive.

Crushed bale of recyclate.


Landfill in Victoria is extremely cheap and abundant. There is often no incentive to separate recyclable material from non-recyclable material. The landfill levy in metropolitan Melbourne is $9 per tonne for municipal waste and $15 per tonne for in-dustrial waste.30 By comparison, the landfill levy in Sydney is $46.70 per tonne, and will be raised by $10 (plus CPI) each financial year until 2013-14.31

In the absence of any substantial deter-rent to landfill, the establishment of new recycling facilities or local hubs is a highly speculative business. An increased landfill levy would provide more certainty for the recycling industry, encourage investment in new recycling facilities, and lead to an increase in recycling rates.

In some cases, hazardous and/or high value materials should actually be banned from landfill. South Australia has recently given notice that it will ban most e-waste and tyres from disposal to landfill.32

Extended producer responsibility (EPR) is a “policy approach in which a producer’s responsibility for a product is extended to the post-consumer stage of a product’s life cycle”.33

This has the effect of providing an incentive for products to be better designed for repair or recycling. In turn, EPR should also pro-vide incentives for consumers to consider the lifespan and recyclability of a product.

The European Union’s Waste Electronic and Electrical Equipment (WEEE) Directive is a form of EPR that requires consumers to be able to return e-waste “at least free of charge”.34 The WEEE Directive is in its early years and has not been uniformly intro-duced by member countries.

Recycling rates are negligible for small appliances: 25 per cent for medium-sized appliances and 40 per cent for larger ap-pliances.35 Compared to recycling rates for e-waste in Australia however, which are estimated to be about 3 per cent for all e-waste, the European model represents a vast improvement. Furthermore, recycling of e-waste in Europe is rising each year as more people become aware of the directive and obtain access to recycling facilities.36

EPR measures are being considered for a number of hazardous and/or high value products by both state and federal govern-ments, including gas bottles, tyres and e-waste. These processes, coordinated by the Environment Protection and Herit-age Council37, have been on-going for a number of years without yet delivering a tangible outcome.

Training required to promote this growthAs the industry grows, engineers will be required for the design, construction and oversight of new MRFs and reprocessing facilities. The need for skilled plant operators will also increase and the industry will need to consider a serious training

initiative to meet this demand38.

There is currently no designated trade pathway for labourers in the recycling industry. Most of the job-specific training is done on site with existing employees, a pattern that may not be feasible in future as the complexity of sorting and reprocessing increases.

Success storiesVisy, Laverton – Glass Recycling

Visy operates an automated glass recycling facility in Laverton that is unique in Australia. The facility uses electronic identification to ‘see’ up to 16 million different colours at high speed. It can sort glass pieces as small as 6mm. Sorting glass to this grade vastly improves the recovery rate of bottles and jars collected by local government. Visy’s Laverton plant recovers about 200,000 tonnes of glass each year. Of that, 80 per cent is sent for reprocessing into glass packaging or fibreglass product. The remaining 20 per cent is diverted to lower grade uses such as road base or landfill cover. Visy currently employs 37 people over its entire Laverton site and operates other MRFs in Heidelberg, Springvale, Geelong and Swan Hill.

Veolia and Natural Recovery Systems, Dande-nong – Green Waste Recycling

In-vessel composting is the treatment of organic material within a closed container. Using an aerobic process (in the presence of oxygen), in-vessel composting provides optimum condi-tions for micro-organisms to break down organic waste. The joint venture between Veolia and Natural Recovery Systems (NRS) in Dandenong


is the only in-vessel composting facility in Mel-bourne. Unlike most open composting facilities, in-vessel composting is also able to process food waste in balanced amounts, as the Veolia NRS facility does. All but four inner city councils offer a green waste collection system, yet only a handful of municipalities collect food waste as part of this collection. The Veolia NRS facil-ity is operating at close to its capacity of 24,000 tonnes per annum, representing around 10 per cent of the organic waste collected in Melbourne each year. Currently, the facility employs 5 people.

Alex Fraser Group, Laverton, Epping and Clayton – Construction and Demolition Recy-cling

The Alex Fraser Group is Australia’s biggest recycler of C&D waste. The bulk of their recy-cling business involves the crushing of concrete, brick and masonry rubble into an aggregate certified for use in road bases and civil construc-tion. Recycled aggregate has 65 per cent less embodied greenhouse gas emissions than virgin material. The other major component of Alex Fraser’s recycling business is the reprocessing of steel into construction and commercial grade materials. Alex Fraser employs approximately 140 people across three sites in Melbourne, and a further 60 people in Queensland.

MRI, Campbellfield – E-Waste Recycling

MRI is a specialist recycler of end-of-life com-puters, monitors, printers and batteries. It also handles most other e-waste. In the first instance, MRI sells about 30,000 refurbished computers each year. Items of no value are stripped into component materials for shipment to reproces-

sors, with the exception of nickel cadmium bat-teries being reprocessed on site. MRI employs 44 people nationally, about half of whom work at their Campbellfield plant. They have an annual turnover of approximately $5 million per annum, and divert approximately 4500 tonnes from landfill.

The Brotherhood of St Laurence Pheonix Fridge Program

Phoenix Fridges repairs, recycles and retro-fits unwanted refrigerators to make them more energy-efficient. The fridges are then offered to low-income families, helping to reduce both energy costs and greenhouse gas emissions. The program also creates skilled employment opportunities by training disadvantaged job-seekers to retrofit the fridges. Phoenix Fridges is a joint project of the Brotherhood and the Moreland Energy Foundation, and is supported by TRUenergy, the Adult Multicultural Education Service (AMES) and the Victorian Government’s Sustainability Fund.

Further informationA National Waste Policy: Managing Waste to 2020, Discussion Paper, Department of Environ-ment, Heritage, Water and the Arts, 2009.

Management of Australia’s Waste Streams, Sen-ate Standing Committee on Environment Com-munication & the Arts, 2008.

Metropolitan Waste and Resource Recovery Strategic Plan, Victorian Government, 2009.

State of Waste Series: Victoria, Total Environment Centre, 2008.

Tipping Point - Australia’s E-waste Crisis, Total Environment Centre, 2008.

Towards Zero Waste Strategy, Victorian Govern-ment, 2005.

Turning Rubbish into Community Money, the of-fice of Colleen Hartland MLC, 2009.

Waste and Recycling in Australia, Hyder for the Department of Environment, Water, Heritage and the Arts, 2008.

Endnotes1 Towards Zero Waste Strategy, Victorian Gov-ernment, 2005.

2 The Blue Book – Australian Waste Industry, 2007/2008, Industry and Market Report; WME. This assumes that proportion of employment in the collection and transport of recyclate is that same as the recovery rate of recyclate, being 62 per cent.

3 Victorian Local Government Annual Survey, Sustainability Victoria, 2006-2007.

4 Australian Recycling Values – a net benefits assessment, The Australian Councilor of Re-cyclers (ACOR), 2008. It has been assumed that the proportion of this economic activity that resides in Victoria is equal to the proportion of the population that resides in Victoria, being 24 per cent.

5 The Blue Book – Australian Waste Industry, 2007/2008, Industry and Market Report; WME.

6 CityWide is an independent company 100 per cent owned by Melbourne City Council.


7 Towards Zero Waste Strategy, Victorian Gov-ernment, 2005.

8 A National Waste Policy: Managing Waste to 2020, Discussion Paper, Department of Environ-ment, Heritage, Water and the Arts, 2009

9 This is not to discount the effect that the fed-eral government’s financial and economic policy have on the investment in, and development of new recycling infrastructure. ACOR and the Boo-merang Alliance recently released the National Recycling Initiative which, inter alia, included requests for the federal government change the rate of depreciation for investment in recycling infrastructure and to raise capital for recycling infrastructure through green bonds.

10 A National Waste Policy: Managing Waste to 2020, Discussion Paper, Department of Environ-ment, Heritage, Water and the Arts, 2009. The EPHC was established by the COAG to address broad national environmental policy issues, and includes amongst its members the relevant state and federal minister.

11 Towards Zero Waste 2005, and Towards Zero Waste Updates 2004-05, 2005-06 and 2006-07, Sustainability Victoria.

12 Resource Conservation Challenge: Cam-paigning Against Waste, 530-F-02-033, Envi-ronmental Protection Authority, United States of America, 2002.

13 As used in Potential for Greenhouse Gas Abatement from Waste Management and Re-source Recovery Activities in Australia, Warnken ISE, 2007, and the best case scenario predicat-ed in Metropolitan Waste and Resource Recov-

ery Strategic Plan, Victorian Government, 2009.

14 This compares well with the forecast of 1200 new jobs by 2014 in collection and sorting for the entire Victorian waste industry in The Blue Book – Australian Waste Industry, 2007/2008, Industry and Market Report; WME. This projec-tion is based on the less aggressive assumption of a 75 per cent recovery rate in 2014, which is the state government’s Towards Zero Waste target. However, it does also assume a 21 per cent growth in total solid waste generation, and subsequently includes 186 additional jobs in transport.

15 Analysis of The Blue Book – Australian Waste Industry, 2007/2008, Industry and Market Re-port; WME; and Australian Recycling Values – a net benefits assessment, The Australian Coun-cilor of Recyclers (ACOR), 2008, giving a ratio of jobs in reprocessing to sorting of 56:44.

16 Using www.wikipedia.com; and www.cia.gov. Ireland has a population of nearly 6 million peo-ple, and a GDP of US$259 Billion. Victoria has a population of 5.2 million and a SDP of Aus$242 Billion.

17 WEEE Recycling a Remarkable Success Story, Department of the Environment, Heritage, and Local Government, Ireland, 2006. It is pre-sumed that this includes employment in collec-tion, sorting and reprocessing.

18 Using ibid; Tipping Point - Australia’s E-waste Crisis, Total Environment Centre, 2008; and Gar-rett rules out electronic waste tax, The Austral-ian, 19 November 2008. Prior to the introduction of the scheme in Ireland, the average amount of e-waste recycled per person was 1.4kg per

person. Since the introduction of the scheme, this amount has grown to 7kg per person. It is estimated that the rate of e-waste recycling in Australia is 4 per cent, which equates to 0.26kg per person per year. It has been assumed that Victoria’s rate of recycling is the same as the national rate.

19 Analysis of Towards Zero Waste Strategy, Victorian Government, 2005.

20 State of the Environment, Victoria, 2008, The Commissioner for Environmental Sustainability.

21 Investigation into commercial waste and recycling services in the CBD, Hyder for City of Melbourne, 2006.

22 Using Australian Beverage Packaging Con-sumption, Recovery and Recycling Quantifica-tion Study, Hyder for Packaging Stewardship Fo-rum of the Australian Food and Grocery Council,

23 Ibid.

24 Six-Month Report of Beverage Container Recycling & Significant Carbon Reductions, California Department of Conservation, 2008.

25 Methane is created by the anaerobic (in the absence of oxygen) decomposition of degrada-ble organic carbon (waste, food waste, timber, paper and cardboard).

26 Analysis of Potential for Greenhouse Gas Abatement from Waste Management and Re-source Recovery Activities in Australia, Warnken ISE, 2007.

27 Extended Facts on Why Garbage is not Re-newable Energy, Grass Roots Recycling Net-work, USA.


28 Council Directive 1999/31/EC of 26 April 1999 on the landfill of waste, European Union.

29 Metropolitan Waste and Resource Recovery Strategic Plan, Victorian Government, 2009.

30 www.epa.vic.gov.au

31 www.environment.nsw.gov.au

32 State Government SA boosts recycling effort, Government of South Australia, 2009.

33 www.oecd.org

34 Directive 2002/96/EC of the European Parlia-ment and of the Council, 2003, European Union.

35 2008 Review of Directive 2002/96 on Waste Electrical and Electronic Equipment, United Na-tions University.

36 Ibid

37 The Environment Protection & Heritage Council (EPHC) is a statutory body that includes membership from the state and federal environ-ment ministers, and their relevant departments, and “addresses broad national policy issues relating to environmental protection, particularly in regard to air, water, and waste matters”.

38 The Blue Book – Australian Waste Industry, 2007/2008, Industry and Market Report; WME.


Summary An introduction to the industryBy the end of 2008, 1300 MW of wind power had been installed in Australia, up from less than 100 MW in 2000.1 The last five years have seen an average annual growth rate of 47 per cent.

Compared to the world leaders, however, wind capacity per person is still low.

Spain, for example, has 386 MW per million people, compared to just under 60 MW in Australia.2 This is despite the fact that Australia has some of the best wind resources in the world. (See Fig 1)

Wind power capacity in Australia is expected to increase five fold over the next seven years, primarily as a result of the federal government’s 20 per cent Mandatory Renewable Energy Target.3 The expanded MRET was preceded by state targets, including the Victorian Renewable Energy Target (VRET, legislated in 2007). VRET gave Victorian wind projects a headstart over other states, with more than 40 per cent of the wind power delivered under the increased MRET target expected to be located in Victoria.4

The growth in wind power is expected to result in investment of more than $4 billion in Australia between 2010 and 2020.5 (See Fig 2)

The Australian wind industry currently employs more than 2000 people6, up from about 1000 in 20057. Annual installations in 2008 doubled compared to 2005, so the development, con-struction and installation sectors show particu-larly strong growth. On current projections for growth, employment in the wind industry will peak at nearly 6000 people in 2011, and then

decline sharply unless there are policy interven-tions to prevent the boom-bust cycle.

The state of the industry in VictoriaThe first wind farm in Victoria was commissioned in 2001 at Codrington, near Port Fairy, and was rated at 18 MW. Total capacity in Victoria reached 192 MW by the end of 2008, and could reach more than 2500 MW over the next four years according to the projections prepared for the National Electricity Markets Management Company (NEMMCO)8. (See Fig 3)

After a strong start, there was very little growth from 2005 until 2008 as the national MRET target (set at 9500 GWh under the Howard Govern-ment) was reached ahead of schedule and was not increased. By 2006 it had become uneco-

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nomic to construct new projects and a number of wind installers and manufacturers were forced to move offshore, including the Vestas blade manufacturing facility in Portland, Victoria.

The commencement in 2007 of the Victorian Re-newable Energy Target (VRET) for 3274 GWh of renewable energy by 2016 meant that projects, planning and construction were ramped up. The VRET will be incorporated into the revised national mandatory renewable energy target, al-though the legislation has not yet been finalised.

There are now 1650 MW of approved projects in Victoria, with a further 2513 MW proposed. (See Table 1)

The only wind manufacturing currently operating in Victoria is at Keppel Prince in Portland, which supplies wind towers to wind farms around the country. Keppel Prince operates five factories in Portland. They employ 430 people, including 200 working on wind. Their annual turnover is $110 million, with 60 per cent of that in the wind energy business. (Read more about the Keppel Prince success story further on).

Current state and federal government policiesAs described, the federal government’s MRET and the state government’s VRET have been the major drivers of new wind projects in Victoria. A secondary driver of wind projects nationally has been consumer GreenPower purchases. Victoria currently has the highest consumer take-up of GreenPower. The GreenPower program is threat-ened by the introduction of the Carbon Pollution

Reduction Scheme (CPRS) in its current form.

If the CPRS becomes law it will deliver an ad-ditional incentive to develop wind projects (aside from its impact on GreenPower), although the carbon price is not expected to be sufficient to get new projects off the ground independent of the MRET.

Jobs created by this industryThe types of jobs created in wind are varied, ranging from engineers, electricians, and con-struction workers to highly specialised consult-ants in noise or meteorology.

More than half of the direct employment related to wind turbines is in manufacturing, most of which currently takes place off-shore. The only large scale manufacturing currently taking place

onshore is fabrication of the towers. This ac-counts for an estimated 19 per cent of the manu-facturing value of a wind turbine.10

Blade manufacturing accounts for a further 23 per cent, so re-establishing this capability in Australia could secure up to 2000 jobs. Manu-facturing jobs are entirely dependent on new installations, however, and it is very challenging to maintain or expand facilities in Australia if installations follow a boom and bust pattern. De-velopment and consultancy staff, which currently make up nearly 20 per cent of jobs in the wind industry, will also not remain without prospects of new development.

Smoothing the growth profile for the wind indus-try is a top priority if we want to develop a stable local manufacturing industry.

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Fig 3: Wind power in Victoria and projection to 2020.


Growing the industryProspects for growth in the wind industry are very strong until 2016. Wind power in Australia is expected to increase five-fold, and in Victoria is expected to increase nearly fourteen-fold. While this is good news, it is important to avoid the boom and bust cycle of the past eight years.

The wind industry in Australia came close to stalling in 2007. The first national Renewable En-ergy Target, for 9500 GWh renewable energy by 2010, was met ahead of time in 2006. Although projects were in advanced stages of develop-ment, they were unable to go ahead without the income from Renewable Energy Certificates.11 With uncertain prospects, wind developers struggled to remain in Australia, especially at a time when the industry was booming globally.

The commencement of the Victorian Energy Target in 2007, followed soon after by the NSW target, kick-started Australian wind energy on a new growth cycle. These targets are set to be rolled into the 20 per cent national renewable energy target.

The projection for growth to 2020, however, looks set to repeat the boom and bust cycle un-less there is a policy change. Estimated employ-ment in the wind industry is set to reach nearly 6000 people in 2011 as a result of the projected surge in construction.12 On current projections, jobs fluctuate between 4000 and 5800 until 2016, and then drop back to 4000 when annual installations cease. (See Fig 4) In Victoria, em-ployment could reach more than 4000 in 2010, and fall to 900 as installations stop.

This may overestimate the jobs that would re-

Operator/ developer Operating Approved Proposed Total

Wind Power Pty Ltd 12 MW 29 MW 930 MW 971 MW

Union Fenosa - 198 MW 705 MW 903 MW

Acciona Energy - 471 MW 288 MW 759 MW

Pacific Hydro 159 MW 107 MW 173 MW 438 MW

AGL/ Meridian - 409 MW - 409 MW

West Wind Energy 131 140 MW 271 MW

RES Southern Cross - - 150 MW 150 MW

Wind Farm Developments - 112 MW 30 MW 142 MW

Mitsui & Company (Australia) Ltd - 104 MW - 104 MW

Roaring 40’s - - 68 MW 68 MW

NewEn Australia - 30 MW 30 MW 60 MW

Synergy Wind Pty Ltd - 28 MW - 28 MW

International Power - 28 MW - 28 MW

Transfield Services 21 MW - - 21 MW

Hepburn Renewable Energy Association

- 4 MW - 4 MW

TOTAL 192 MW 1,650 MW 2,513 MW 4,355 MW

TABLE 1: Wind farms in Victoria at end of January 2009 by developer9 Photo: Waubra wind farm, courtesy Acciona Energy


main if the industry stalls once more.

The Vestas blade factories in Tasmania and Portland were victims of the previous downturn in Australian wind energy. The factories closed in 2006 and 2007, with the loss of 300 jobs, 130 of which were in Victoria. The poor outlook for Australian wind energy in the absence of a higher national renewable energy target meant the Danish parent company could not justify the capital investment needed to expand and retool for larger turbines, so the operations became uneconomic. Keppel Prince is currently consid-ering recommencing blade manufacture in Victo-ria13, but has said it would find it difficult to justify unless policies are structured to maintain steady and predictable industry growth.

Policy measures that would help promote this growthThe legislation for the expanded renewable energy target is not yet in place, although the federal government undertook consultation on draft legislation in February 2009.

A number of key issues need to be addressed, however, to prevent a repeat of the boom and bust cycle which has characterised the develop-ment of wind energy in Australia thus far:

2030;

so that all projects have a 15 year time pe-riod to recoup investment when they enter the scheme; and

services in 2000

$66 million ($110 million in total)

(430 people altogether)

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closed in 2007

-nents, particularly blades

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that a minimum of 20 per cent of electricity comes from renewable energy by 2020.

The current draft MRET legislation only maintains the 45,000 GWh target until 2024, after which it tapers to 23,000 GWh by 2030. This means that there will be a rush to build projects early so that they can recoup their investment through REC sales. Projects generally require a 15 year term for debt repayment. A number of submissions on the draft legislation highlighted the need to maintain the target at 45,000 GWh until 2030 in order to spread development across the whole period.14

Over the longer term a higher renewable energy target will be necessary to achieve the level of

emissions reduction necessary to achieve a safe climate future.

Projections for the current draft legislation show that wind capacity will grow rapidly until 2014 – 2016, and then virtually stop. At this point there is likely to be about 6000 MW of wind power in Australia.

This would provide about 5 per cent of Austral-ia’s electricity – well below the amount that could be managed within our electricity system. It would bring Australia to about the same capac-ity per person that Germany has now.

Increasing the time horizon and the target would avoid the scramble to get projects constructed early, and encourage a steady growth period rather than a repeat of the boom bust cycle. This

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in turn would create more sustainable jobs and allow developers the necessary time to consult properly with local communities without rushing to get their projects off the ground.

Given the potential boom in the wind industry, the Victorian Government should enter into dis-cussions with the major wind companies (both developers and manufacturers) with a view to helping them locate within Victoria.

Training required to promote this growthThe following skills are needed in the wind industry15:

Wind farm developers

to coordinate the process.

to design projects and analyse the environmen-tal impacts.

energy forecasts and prediction models.

marketing, accounting).

Manufacturing

-neers.

-sembly.

marketing, accounting).

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for the management of plants.

-ment of plants.

Consultants

wind regimes and output forecasts.

-putational fluid dynamics.

-munication.

-mental matters.

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building work.

(eg. crane drivers, fitters).

building process.


Construction and installation uses similar skills to mining, so the current boom in wind farm con-struction will absorb some of the downturn in the mining sector.

Current shortages are primarily in the project management and engineering roles needed for wind farm development, and the highly special-ized consultancy work needed to get projects from inception to completion.

Success StoriesHepburn Wind – pioneering community owned renewable energy in AustraliaHepburn Community Wind Park Co-operative (Hepburn Wind) will be one of Australia’s first community owned wind farm projects. Based on a highly successful European model, Hepburn Wind’s significant local ownership ensures that it will play a leading role in the environmental, economic and social sustainability of the region.

The project will consist of two wind turbines each rated at 2 MW, located on Leonards Hill ap-proximately 10km south of Daylesford, Victoria. The energy production from the wind park will average over 12,200 MWh of renewable electric-ity each year, which is enough energy to power over 2300 homes, offsetting the entire residential electricity demand of both Hepburn Springs and Daylesford. This electricity will be fed directly into the local distribution network.

The project has progressed through several criti-cal development stages, from preliminary site analysis through to permit approvals and fund-raising. Over two-thirds of the $12 million need-ed for the project to proceed has been secured.

Further informationCertified wind farms - a Clean Energy Council and industry initiative to promote best practice in wind farm development: www.auswind.org/ac-creditation/index.php

Clean Energy Council: www.cleanenergycouncil.org.au

European Wind Energy Association: www.ewea.org

Global Wind Energy Council: www.gwec.net

Victorian wind farm status: www.dpi.vic.gov.au

Wind in Australia – information on existing and proposed wind farms (private site): www.geoci-ties.com/daveclarkecb/Australia/WindPower.html

Endnotes1 Global Wind Energy Council. 2009. Global wind 2008 report.

2 Op cit 1

3 Projections for growth to 2020 for states other than WA are from NIEIR (2008) Projections of Non-scheduled and exempted generation in the NEM, A report for the National ElectricityMarket Management Company, Prepared by the Nation-al Institute of Economic and Industry Research in association with Carbon Market Economics. The projection for WA is from SEDO. WA 2020. Re-newable energy target. Consultation on scheme design. Presentation October 2007.

4 Growth between 2006 and 2020 is assumed to be a result of the new MRET. Projections from NIEIR (2008) op cit 3 and SEDO (2007).

5 Based on $1.2 million on-shore investment per MW (compared to $1.7 total), from the BCSE Clean Energy Report 2007.

6 The most recent data for employment is the Business Council for Sustainable Energy (now the Clean Energy Council) Clean Energy Report 2007, which listed 988 employed in wind energy in 2005. There is no more recent data, so em-ployment has been estimated using projected installations and employment factors from the European Wind Energy Association (2009) Wind at work. Wind energy and job creation in the EU, Table 7. Manufacturing data has been adjusted, assuming that only 19 per cent of manufacturing occurs onshore (effectively tower manufacture only).

7 BCSE 2008. Clean Energy Report 2007.

8 NIEIR (2008), op cit 3.

9 DPI Victoria. Wind Projects in Victoria. Down-loaded March 2009 www.dpi.vic.gov.au

10 From Opportunities for Canadian Stakehold-ers in the North American Large Wind Turbine Supply Chain, Figure 23. www.ic.gc.ca/eic/site/rei-ier.nsf/eng/nz00166.html#figure2.3

11 Under the Mandatory Renewable Energy Tar-get electricity retailers are required to purchase Renewable Energy Certicates (RECs) equivalent ot 9500 GWh by 2010 (according to their share of electricity sales). Renewable energy genera-tors such as wind create RECs and sell them. This mechanism drives the development of renewable energy by ensuring an income stream to bridge the gap between coal fired electricity costs and renewable electricity costs, with the


price of RECs is set by the market. Once suf-ficient renewable generation to meet the target is in place, any further renewable projects built would create an oversupply of RECs, causing the price to collapse. Effectively, developers could not go ahead.

12 Data on Australian employment is not avail-able, so projected numbers are estimated using projected construction rates and employment factors from the European wind industry (see note 6). Actual manufacturing numbers are used for 2007 and 2008.

13 See boxed text, Keppel Prince, a wind suc-cess story.

14 For example, the Clean Energy Council, the Centre for Environmental Markets (UNSW), Pacif-ic Hydro Pty, Wind Prospect Pty. Available from www.climatechange.gov.au/renewabletarget/consultation/sub_ret/submissions.html

15 European Wind Energy Association (2009) Wind at work. Wind energy and job creation in the EU. Table 09, page 27-28.

Victoria – the Green Jobs State: Seizing the Opportunities is published by Environment Victoria.

victoria: the green jobs state

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