SEAI - Creating the right environment for ISO 50001 to thrive - Albert Dessi,
Dept. of Resources, Energy & Tourism, Canberra
Well I am delighted to be here representing Australia, not as the head of my
delegation but the delegation that Australia has sent. So I am here to talk about what
is Australia’s key energy efficiency program for large energy users – The energy
efficiency opportunities program. It’s a program that is mandatory in legislation for
any company that uses over half a petajoule in energy, which is the equivalent of
10,000 Australian households, and there are approximately 310 companies in the
program at the moment. We cover essentially all sectors of the economy except
electricity except electricity and gas distribution. So we cover companies across the
economy. So today I’ll talk about the EEO program and how it works and how it
relates and how it relates to the ISO 50001 standard and how the EEO standard can
potentially adjust with the emergence of ISO 50001.
The first point that’s relevant in our program is the fact that it covers almost 60%
currently of Australia’s energy use. The 29%, which is on your right, the EEO
corporations, they are the corporations that were in the program between 2006 and
2011. In 2011 we then extended the program to cover electricity generators, which
is 28% of the energy use and brings the program up to 57% of national primary
energy use. In the next year, actually in July 2012 we are extending the program to
electricity and gas distribution networks and that will bring us up to 65% of
national primary energy use. And because we are still not comfortable with the level
of expansion that we have had we are also extending on a voluntary basis to
medium energy users and who knows where we will go next. But given the size of
the energy use in the EEO program it’s of critical importance to Australia’s energy
security and energy performance that the program is effective.
The program was announced as part of the Energy White Paper in 2004 in response
to Australia’s low rate of progress relative to the OECD in terms of the industrial
energy efficiency. It was designed to prevent information barriers to identify and
implementing energy efficiency opportunities. And was designed after two years of
consultation and trials with industry to determine what worked. Australia has a
large resource base and as a consequence the program covers a very large
proportion of energy use in a number of highly energy intensive areas so we are up
to and between 90 and 80% in areas such as mining and metals processing in terms
of industrial coverage and we also cover a significant portion of energy use in
transport and services between 15 and 25% and we cover now close to 100% of the
generation sector which is all large scale generation. So the program requires
companies to undertake a rigorous energy assessment following an assessment
framework in legislation and to undertake analysis of cost effective opportunities to
reduce their energy use with simple paybacks of up to 4 years. The reason we use
simple paybacks is to avoid any questions about discount rates that would confuse
the issues of compliance. The goal of the program is to encourage large energy users
to identify and evaluate opportunities and to encourage greater implementation of
projects as a result. Unusually we don’t require companies to implement savings
that they identify. We leave that decision up to that corporation but we do require
companies to report their business response a. whether or not the projects will be
implemented. And implementation is encouraged by requiring that implementation
opportunities be presented to senior decision makers who have the power to make
the investments and also to the board, which appears to be a fairly unique feature of
this program. And the result of bringing opportunities to the attention of the board
is that EEO companies have adopted or are implementing approximately over 50%
of opportunities that they have identified. In terms of technical features it runs over
a five-year cycle. We have an assessment and we have a verification process to
ensure that the assessment meets regulation and there is an external evaluation of
the program every two and a half years. Companies must asses 80% of their
corporate energy use in the first 5 year cycle and 90% in the second 5 year cycle so
we don’t require them to look at the intricate details of their operations that are not
really material to their energy use.
The core of the program is our assessment framework, which specifies the
requirements for assessments. The assessment framework has 6 key elements,
which are leadership, people, involving the right people, information data and
analysis, opportunity identification and evaluation, decision-making requirements
and communication requirements including reporting to the board. Each key
element has a statement of the intent and key requirements, which are quite
detailed in terms of what the company must undertake. We are reasonably flexible
in terms of the approach that companies can take to achieving compliance but we
require companies to submit an assessment plan, which the department has to
approve to ensure that they are comfortable that the company can achieve
compliance potentially.
The assessment framework aims to improve the quality of the information provided
to decision makers by ensuring a rigorous whole system analysis of energy use data
and we’ve had a number of speakers referring to the importance of looking at the
whole system and not just an item of equipment. We also require companies to
report the co-benefits or the non-energy benefits as part of their reporting and a
number of companies have told us that has brought projects to the attention of
decision makers that would not have otherwise been implemented. The programs
assessment framework facilitates a systematic process to identify and assess cost
effective opportunities and has elements of an energy management system so it is
primarily an assessment program but is consistent with ISO 50001.
We’ll just discuss the individual key elements briefly. The leadership key element
basically requires companies to set goals and objectives for their energy
performance and to allocate resources to the assessment. The second key element,
which is people, requires a wide variety of people across the business to be involved
in analysing data and assessing opportunities and also making decisions involving
energy efficiency. Both of these key elements are quite consistent with ISO 50001
but perhaps more focused on ISO 50001 is what is termed the audit component. As
the program proceeds and as ISO 50001 develops there should be some opportunity
to further align the two.
The most important requirement in the programs key element, which is information
data, and analysis, which is what I work on most of the time. And the EEO program
has a requirement to do a quite comprehensive technical analysis of the
performance of the corporation actually, and within each site it requires an analysis
of energy and material flows and we recommend doing an energy mass balance to
find out where energy is used and lost. So the requirements for the energy
assessment are significantly more detailed what is currently in ISO 50001 in terms
of an energy review and potentially more detailed than an energy audit
requirements of ISO 50001 although those have not been completed yet and
Australia’s involvement has only started this week. So we think that there is some
potential for Australian companies to adopt ISO 50001 but in terms of the data
analysis requirements there may be some need for the government to apply or
impose a few additional requirements on companies in that specific area if we are to
allow companies to use ISO 50001 for EEO purposes.
The next key element is opportunity identification and analysis. In the EOO program
we have a requirement whereby companies have to look at their data and look at
the business context and identify the data for opportunities and then there is a
process for filtering those opportunities to come up with the projects that are most
viable and then we require that they make recommendations to decision makers.
We have an explicit accuracy requirement as part of that so opportunities should be
within plus or minus 30% of expected value that’s reported and again we do require
reporting of co-benefits as part of that.
The fifth key element is decision making and that’s possibly one of the areas of
difference with ISO 50001 in that we perhaps have more explicit requirements on
how companies should make decisions on opportunities that they find. And we also
have requirements, which are probably consistent with ISO 50001 in how they
allocate resources to additional investigation and to projects that they will decide to
implement.
The final element and another area of significant correlation though with some
difference is that we require communication of results and of assessment processes
both within and outside the company including reporting to the government and the
public and reporting to the board. The board reporting is possibly a pointed
difference with the EOO program and something that we would want to retain
because the we’ve received feedback that it’s been quite effective because what
interests the board tends to interest the people at a lower level who are doing an
analysis.
So we might just look at how effective the program has been now that we have seen
what the program does. So far the program has, looking at results of 28% of
Australia’s national energy use because energy generators have not reported yet.
The program has achieved savings of around 1.1% of Australia’s total greenhouse
emissions and 75.5 of petajoules of projects that are being implemented, which
amounts to 4.4% per cent of the energy use of the corporations involved and 5.2%
of the energy use that they actually assessed. So these are quite good results
considering there wasn’t any compulsion on the investment of these projects.
And this is a different representation where the spheres represent the emissions
savings for each of the different business responses to an opportunity. And I might
point out the annual savings reported by companies for implementing projects are
in the order of 700 million dollars per year and that’s including the co-benefits. And
an Australian dollar is approximately 1 US dollar. WE have been working with ISO
TC242 in working group 3 or I think 4 on the energy audit requirements and there is
perhaps one point of difference between the EEO framework and the energy audit
requirements which is the greater concentration on systems wide audits and
ensuring that the business context is taken into account in the assessment of
opportunities so when we specify that companies look at data we require that they
look at the context for an investment to ensure for example that they are not
replacing a pump in a plant that is about to shut down. Basically all of the objectives
of the EEO program are compatible with ISO 50001 and we are in the process of
revising our energy audit standards to be consistent as far as possible with ISO
50001 but also as consistent as we can with the EEO program framework because it
has worked to date.
A question you might ask about the EEO program is to what extent the savings that
companies have identified have been additional due to the program and to what
extent they would have happened anyway? Evidence from our mid-cycle review is
that the program has strengthened energy assessment and energy management
within corporations and addressed barriers quite effectively to identification and
effectively to implementation although because we are not giving them money we
can’t promote implementation as much as we would like. It’s worth noting though
that the program doesn’t provide money to corporations, which means that we are
not displacing any private expenditure because we are not putting money into the
market. We appreciate some opportunities may have been implemented anyway in
the absence of the program however we conclude that the program has made a
significant contribution.
Just quickly summing up there are different ways to assess energy management and
energy assessment programs for different circumstances that different countries
have. ISO 50001 are a useful energy management framework in many ways. EEO has
a significant energy management component and a significant crossover but we are
somewhat more specific in certain aspects such as information data and analysis
and reporting to the board and the business decision-making process. So it will take
some work on our part to determine how we can make the two coexist although we
think there is some potential to do that over time and we look forward to becoming
more involved in the development of ISO 50001 and the subsidiary standards as the
work of TC242 proceeds. Thanks to our Irish hosts.