Energy Savings Initiative

Issues Paper and Modelling Assumptions consultations

The Energy Savings Initiative Working Group released an Issues Paper and Modelling Assumptions Report for public comment in December 2011. Further detail about these consultation processes can be found in Consultation on a national Energy Savings Initiative.

Submissions in response to the Issues Paper closed on 27 February 2012.

Submissions in response to the Modelling Assumptions Report closed on 17 February 2012.

The Working Group thanks those organisations who submitted responses, as these will provide valuable input to the ongoing investigation and modelling of a national Energy Savings Initiative. Non confidential submissions can be found on the closed consultation page.

Under the Clean Energy Future Plan the Australian Government committed to do further work to investigate the merits of a national Energy Savings Initiative (ESI). An ESI is a market-based tool for driving economy-wide improvements in energy efficiency. It would place obligations on energy retailers to find and implement energy savings in households and businesses. An ESI would help consumers to save money by encouraging the identification and take-up of energy efficient technologies.

Schemes currently operate in New South Wales, Victoria and South Australia and one is planned to commence in the Australian Capital Territory in 2012. The further work under the Clean Energy Future Plan will explore the costs and benefits of replacing existing and planned schemes with a national scheme, including whether this would reduce complexity and duplication, and allow energy consumers in states without existing schemes to benefit. ESI schemes also operate in many European countries and the United States, often alongside and complementary to a carbon price. India has introduced a white certificate trading scheme and a number of Chinese provinces are finalising the design of such schemes.

The Clean Energy Future Plan states that the further work on a national ESI will be 'the subject of detailed policy analysis, economic modelling and consultation with the community, industry and state and territory governments'. The commitment outlines a number of key policy issues that the design work will consider:

  • the annual targets that would apply
  • sectoral and fuel coverage issues
  • energy savings activities to be considered eligible activities, and
  • how a smooth transition from state-based schemes could be managed.

Further, any national scheme would need to:

  • have broad coverage (that is, residential, commercial and industrial sectors), and
  • create an incentive or a requirement to create certificates in both low-income households and in ways which reduce peak demand.

Subject to the findings of economic modelling and regulatory impact analysis, the Australian Government will make a final decision to adopt a national ESI. A national scheme would be conditional on the agreement of the Council of Australian Governments and the abolition of existing and planned state schemes.

The commitment within the Clean Energy Future plan formed part of the Australian Government's response to the report of the Prime Minister's Task Group on Energy Efficiency. The Task Group recommended the 'introduction of a transitional national energy saving initiative to replace existing and planned state energy efficiency schemes, subject to detailed consultation on design, in the Task Group's final report.

The Energy Savings Initiative Working Group and Advisory Group

In line with the commitment made in the Clean Energy Future Plan, the Australian Government has established an ESI Working Group to lead the further work, comprising senior officials from the Department of Climate Change and Energy Efficiency and the Department of Resources, Energy and Tourism.

The ESI Working Group will:

  • draw together the experiences and lessons learned from Australian and international energy savings schemes
  • commission economic and energy market modelling, and
  • undertake comprehensive consultation with state and territory governments, industry and the community.

The ESI Working Group will provide a progress report to the Australian Government in the first quarter of 2012.

The ESI Working Group's terms of reference and key dates of its work program are available. The terms of reference reflect the Working Group's focus on a thorough cost benefit analysis of a national ESI. The scope of this work includes consideration of

  • any employment opportunities and skills needs associated with an ESI
  • changes to the distribution of regulatory burden
  • the treatment of early movers and the clear and smooth transition of arrangements from existing schemes
  • whole-of-economy effects of shielding specific sectors from price impacts, and
  • Australia's international competitiveness.

The ESI Working Group's investigations are being assisted by an Advisory Group comprising state and territory government officials and representatives from peak industry groups, energy market organisations, and environmental, union, community and welfare organisations.

Reports