How Aussies are missing out on billions
Australia is missing out on billions in savings because it's not taking action on a simple measure that could help households and businesses keep more of their hard-earned cash in their pockets.
Improving energy efficiency is something that other countries like the US, China, Germany and Japan are tackling aggressively and a new report shows this has delivered huge cuts to bills.
According to the Energy Efficiency Council's report, Australia's global competitors are actively pursuing energy efficiency improvements and reaping the rewards.
In Germany, energy bills have been reduced by 30 per cent, saving the average household about $790 a year. In China, bills have been cut by about 20 per cent.
It has also been good for economic growth, increasing global GDP by an estimated $2.8 trillion in 2017. In California alone, there were about 310,433 jobs in energy efficiency.
While many people don't understand the potential for energy efficiency to make a huge difference to their consumption and their bills, overseas examples show how powerful it can be.
In Japan for example, energy management after the Fukushima tsunami helped it reduce its peak demand by 19 per cent.
By 2016, energy management had helped the country replace a whopping 39 per cent of lost capacity when 49 nuclear generators closed after the disaster.
And while countries like Australia dither on climate change action, energy management has been doing the heavy lifting on reducing emissions.
Energy management has delivered by far the largest reduction in global greenhouse gas emissions this century, the report notes.
The World's First Fuel report estimates if Australia adopted leading international practices, the energy bills of households and businesses could be slashed by $7.7 billion a year.
It would also create 120,000 extra jobs and help reduce carbon emissions, potentially delivering half of the abatement needed to meet Australia's carbon emissions reduction target of 26-28 per cent by 2030.
"Energy efficiency is the single, most powerful tool we have to cut energy bills, improve energy security and address climate change," Energy Efficiency Council chief executive officer Luke Menzel said.
"Australia is failing to grasp this golden opportunity - it's like we're walking past $100 bills that are just lying on the ground."
In Australia there has been an obsession with developing new sources of energy generation especially as coal-fired power stations close down, and while this is important, energy management can deliver more capacity at a much lower cost.
"It's normally far cheaper to incentivise manufacturers to voluntarily reduce demand for a few hours a year than to build generators that only operate during extreme heatwaves," the report said.
In fact it has been the over-investment in supply-side capacity that has contributed to average residential electricity bills increasing by 35 per cent in the 10 years between 2007/08 and 2017/18.
"Australia has barely begun to tap the potential of energy efficiency," the report states.
In China, efficiency improvements between 2000 and 2017 reduced energy demand by almost 10 per cent - equivalent to double the amount of energy that Australia used in 2017.
The report notes that analysis of the world's 25 largest energy consuming countries ranked Australia as the worst developed country for energy efficiency policy and performance, with particularly poor performance in industry and transportation.
"The good news is Australia can start improving energy efficiency tomorrow, quickly and easily making changes that will cut our costs of living, shore up energy security and improve our response to climate change," Mr Menzel said.
WHAT CAN WE DO?
The report has made a number of recommendations to improve Australia's performance.
This includes introducing policies to ensure Australia meets its national target to improve energy productivity by 40 per cent by 2030.
"The increase in Australia's gas exports, and the associated increase in energy used to liquefy gas, has contributed to Australia falling behind its target," the report said.
"However, the main reason that Australia has fallen behind its target is that governments have not introduced the policies that are necessary to improve Australia's energy productivity."
The report also suggests helping manufacturers identify and invest in improvements, and to introduce strong minimum efficiency standards for appliances, buildings and vehicles.
Minimum efficiency standards for appliances like fridges alone save the average Australian household $140 to $220 a year. But unlike other countries, Australia only sets standards for a number of important appliances like televisions, air conditioners and electric motors through the Greenhouse and Energy Minimum Standards (GEMS) program.
The program covers far fewer appliances than similar programs in the US, China and Canada.
In 2014 Australia also discontinued the Energy Efficiency Opportunities program, which helped companies find more than $1 billion in annual energy savings.
"A 2017 report by the IEA (International Energy Agency) found that Australia's manufacturing sector is the most energy intensive of the 19 advanced economies that they studied," the report noted.
"Even more startling, we have the only manufacturing sector that became more energy intensive between 2010 and 2014."
The report also recommends strengthening building construction codes and introducing a national program to rate the energy efficiency of residential properties when they are put for sale or lease.
Meanwhile, improving vehicles' fuel-efficiency is one of the "greatest opportunities" to address Australians' cost of living pressures, the report notes, adding that city households spent more than $3500 on fuel in 2017-18.
"Australia is virtually the only developed country that doesn't protect consumers with fuel-efficiency standards for light vehicles," the report states.
These standards were introduced in countries like the US, Japan and many European Union countries almost 40 years ago.