Department of Economic Development,
Jobs, Transport and Resources
GPO Box 4509
Melbourne
Victoria 3001
307 Ferntree Gully Road Locked Bag 87
Mt Waverley Victoria 3149 Australia
Telephone +61 3 8540 2300
Facsimile +61 3 8540 2280
ABN 63 061 583 533
www.australianpaper.com.au
10th November, 2015
Dear Sir / Madam,
Response to Stakeholder Consultation on VEET Regulation Changes
In response to your call for submissions from stakeholders of the Victorian Energy Efficiency Target (VEET) to
put forward their concerns in light of the progressive changes to the regulation of the scheme, we reiterate our
views with regards to Energy Intensive and Trade Exposed (EITE) businesses and the need to retain the
exemption on these particular entities from exposure to this program, in line with the NSW Energy Savings
Scheme (ESS).
Under the now rescinded Energy Resources Efficiency Plan (EREP), EREP businesses were excluded from
participation as the targets of the VEET scheme were factored with EREP exemptions assumed to be
ongoing. At the time of considering exemptions of the revised VEET scheme it was determined that retaining
the then existing EREP exemptions would cover over 95% of EITE businesses.
Complex integrated manufacturing sites are representative of the various and sometimes conflicting issues
that large entities would potentially face under an eventual inclusion of EITEs to the scheme. The following in
our view describe the main concerns:
-
VEET benefits and incentives are mostly focused on households and SMEs with activities such as
heating, lighting and whitegoods. However, with very limited activities that can be related to larger
businesses, mainly on HVAC and lighting but ignoring the mainstream energy flow from the very
industrialised energy usage of a large manufacturing business.
-
Methods of the scheme, which evidently have been developed with the optic of households and
SMEs, are proving to be unsuitable for complex integrated manufacturing facilities. In particular
due to the lack of ‘behind the meter” and energy intensity considerations.
-
With very low real incentive for a large manufacturing complex as described above, participation
on the scheme for this type of stakeholders would be procedurally onerous and compliance would
be expensive.
The case of Australian Paper
Renowned as the largest integrated manufacturing generator of renewable energy in the country and the
largest natural gas consumer in the state of Victoria, to become more energy efficient is a key driver of the
company’s continued viability. This is why our company has invested over $700 million in the past few years to
provide a pulp and paper complex that is employing the latest state-of-the-art technologies and energy
efficient processes.
However, to give an idea of the potential impact that exposing this entity to VEET would produce, in the
context of the current business environment, we would highlight the fact that this Australian integrated fine
paper and packaging paper complex is working hard to be a viable local paper manufacturer against direct
competition from overseas manufacturers that are subject to lighter environmental constraints, operate in a
low wage industrial environment and import large volumes of paper to Australia with factored costs far below
ours. The significance of our continued operation is highlighted by the following facts:

The region where we operate our manufacturing facility has been a power generation hub in Victoria,
but changes over recent times have left the Maryvale Mill as a significant economic provider. Maryvale
Mill is the largest employer in the region making a significant contribution to the national and local
economies.

The business provides for $ 458M p.a. in household income and is the largest employer in La Trobe
Valley, Victoria, supporting 5,928 FTE jobs.

Export markets are instigating anti-dumping actions to protect their own business sustainability.

Australian Paper contributes annually in the order of $ 750M AUD in GDP and Capital Expenditure.
Exposing this EITE business to VEET legislation would not encourage or provide any further energy savings
or efficiencies. Energy efficiency is already a business-as-usual condition for Australian Paper. Exposure to
VEET however, would increase our energy costs by some $18 million per annum and place at risk continued
investment and operation of the Maryvale Mill complex.
In closing, we would draw your attention to our submission on this issue which was made on the 14th May
2015 (copy attached) in which we raised a number of queries relating to the assumptions and modelling used
by the department in their VEET analysis. To date we have not received a reply to these queries.
For any additional information or enquire on this submission, please contact Frank Gonzalez through contact
details shown below.
Yours Sincerely,
Frank Gonzalez
Group Capital, Reporting and Funding
T: 61 3 8540 2417
M: 0431 975 793
E: Frank.Gonzalez@australianpaper.com.au