3 Objectives and principles
The Issues Paper sought views on possible objectives for a national Energy Savings Initiative,
and put forward three proposals for discussion:

to reduce pressure on households’ and businesses’ energy bills generally, through
either promoting energy efficiency improvements that would reduce the quantity of
energy used, or targeting the price of energy, or both;

to support specifically vulnerable energy users to adapt to higher energy costs; and

to help reduce Australia’s greenhouse gas emissions.
It is quite possible that some energy efficiency improvements could contribute to all three of
these objectives at the same time. However, prioritisation is important, since this will
influence the range of policy options against which a national Energy Savings Initiative
would be compared, as well as its potential design.
The following sections review stakeholders’ views concerning the advantages and
disadvantages of the proposed objectives, and summarise the Working Group’s preliminary
view on objectives when considering the case for a national Energy Savings Initiative.
To reduce pressure on households’ and businesses’ energy bills
Several stakeholders, in responding to the Issues Paper, supported a scheme with an objective
of helping households and businesses to manage their energy bills. For instance, the Energy
Efficiency Council noted:
There is a clear case for establishing an Energy Savings Initiative to help households
and businesses adjust to rising energy costs ... Energy prices are rising rapidly in
Australia, and globally, because of expenditure on the network (sometimes called
‘poles and wires’), rising fuel costs and a shift to more expensive forms of generation.
However, the structure of Australia’s energy market and a number of barriers make it
hard for households and businesses to respond to rising energy prices.
Energy Efficiency Council submission
The Issues Paper suggested that a national Energy Savings Initiative could reduce pressure on
consumers’ energy bills by targeting energy prices (the price charged per unit energy) or
energy costs (the product of the price and the volume of energy that a consumer uses). Many
submissions advocated for a scheme which focused on the latter, noting that helping
households and businesses to reduce the amount of energy they consume could help lessen
the impact of rising energy prices and improve productivity. For instance:
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... the primary objective of a National Energy Savings Initiative (NESI) should be to
help consumers improve the energy efficiency of their homes and businesses, as well
as the appliances and equipment within them, thereby reducing their household
expenditure on energy. This will enable households and businesses to reduce their
energy consumption while also cushioning them from rising energy prices.
Mission Australia submission
The key objective of a national Energy Savings Initiative should be to improve the
efficiency of energy across the economy; in particular to empower consumers to make
efficient decisions about their energy consumption and to provide them with
opportunities to use less energy per unit service/output.
Origin Energy Limited submission
Some stakeholders supported a scheme objective that targets energy prices by seeking to
improve the productivity of Australia’s energy infrastructure. Submissions noted that such an
objective would be effective if it targeted the factors that are presently driving energy price
increases, particularly costs associated with network infrastructure upgrades and increasing
peak demand:
Increasing national energy efficiency, especially targeted at reducing peak demand,
will reduce the current level of expenditure required to augment networks to meet
peak demand. In NSW, network charges are set to increase to more than 60% of the
typical electricity bills by 2014. Reducing this component of electricity bills would
benefit all energy users and should clearly be a priority of the scheme.
Council of Capital City Lord Mayors submission
While a number of stakeholders considered that addressing the growth in peak demand would
be highly desirable, many also expressed reservations about whether a national Energy
Savings Initiative was the most appropriate policy instrument for this objective. Even so,
these submissions suggested that a national Energy Savings Initiative could help to lessen the
growth of peak energy demand even without requirements that are specific to peak. For
instance:
Peak energy demand and the rising cost of energy is an important issue, however,
using the NESI to target this problem means that the NESI runs the risk of targeting
too many goals with a single instrument ... The evidence suggests that a NESI that
drives significant energy efficiency dividends will have substantial long-term benefits
on peak energy use, and the price of energy.
Allens Consulting Group submission (on behalf of a number of building sector
organisations45)
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It is Jemena’s strong view that a WCS [white certificate scheme] is not a core policy
vehicle capable of efficiently and effectively responding to the complex energy
efficiency and productivity issues associated with rising peak demand, which are
inherently dynamic in both time and location. However, a WCS may be capable of
making a passive contribution to the reduction of peak demand through the careful
selection of eligible consumer-based energy efficiency activities.
Jemena Limited submission
To support vulnerable energy users to adapt to higher energy costs
The Issues Paper also proposed that a national Energy Savings Initiative could be designed to
support sectors of the community that are particularly vulnerable to price rises, such as
low-income households. Several stakeholders supported this objective, noting that lowincome households are generally more likely to experience barriers to becoming energy
efficient than other households, for example through poorer access to information or capital.
In addition, some noted that low-income households tend to spend a much greater proportion
of their income on energy, making them particularly vulnerable to energy price increases. For
instance:
There is strong evidence that we are entering a new era of energy unaffordability for
many Australians. The cumulative changes to electricity prices from 2007-12
demonstrates increases in excess of 60% in four states and territories ... Together with
increasing disconnection rates reported by the Energy Industry Ombudsman
nationally, this picture points to a trajectory entrenching ‘energy poverty’ for our low
income earners.
United Voice submission
...it is appropriate to require a proportion of activities to take place in low-income and
disadvantaged households because low-income households produce almost
forty per cent less carbon emissions annually than high income households, yet spend
a larger proportion of their weekly income on energy.
Australian Council of Trade Unions submission46
A number of submissions did not support a scheme with the objective of supporting lowincome households. Some stakeholders suggested that a scheme which required a portion of
all energy saving activities to be undertaken in low-income households could increase the
cost and complexity of the scheme.
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For instance, Simply Energy, an electricity and gas retailer, noted:
The imposition of a ring-fenced target increases the complexity of the scheme and
reduces the flexibility that retailers have to manage the costs of the scheme.
Simply Energy submission
Some stakeholders noted that new evidence continues to emerge concerning the most
effective policy options for supporting low-income households to improve their energy
efficiency. In particular, Mission Australia noted that a number of Commonwealth programs
that are part of the Clean Energy Future package have the objective of trialling different
approaches for targeting low-income homes47 and stated that the design of any national
scheme should be influenced by the findings of those programs.
Submissions from Low Energy Supplies & Services and CSR Limited cited evidence from
the Victorian Energy Efficiency Target (VEET) that a scheme design without a low-income
household obligation can still be effective in driving energy efficiency improvements in that
section of the community. These submissions reinforced that any scheme design features
aiming to support low-income homes should be based on the best available evidence.
To help reduce Australia’s greenhouse gas emissions
Finally, the Issues Paper proposed that another potential objective of a national Energy
Savings Initiative could be to help reduce Australia’s domestic greenhouse gas emissions.
This was supported by a number of submissions. For instance:
We submit that the primary objective must be to reduce greenhouse gas emissions.
The NESI is first and foremost an emission reduction policy.
Australian Network of Environmental Defender’s Offices submission
Other submissions noted that, with the carbon price mechanism now legislated, and with an
emissions cap to be in place from 2015, it would not be appropriate for a national Energy
Savings Initiative to have greenhouse gas abatement as an explicit objective. Some
submissions argued that a scheme with such an objective would duplicate the role of the
carbon price mechanism and other key abatement policies:
The goal of GHG [greenhouse gas] reduction is addressed through the introduction of
a price on carbon under the Government’s Clean Energy Future Program, and
supported by existing complementary measures through the RET. As such, to add the
issue of GHG reduction (which would occur as part of an overall demand reduction)
is to add an unnecessary additional priority to a future scheme.
Sustainable Energy Association of Australia submission
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... the proposal for a type of trading system on energy efficiency, the so-called ‘white
certificate scheme’, would duplicate and distort the actions of any broad emissions
trading scheme.
Minerals Council of Australia submission
Many submissions proposed that, rather than directly reducing greenhouse gas emissions, a
national Energy Savings Initiative could support Australia’s broader abatement effort by
seeking to address non-financial barriers to energy efficiency, including those described in
Chapter 1. A number of submissions noted that, if designed to target these barriers, a national
scheme could complement the carbon price by unlocking a range of low cost greenhouse gas
abatement opportunities. For instance:
The ESI and other complementary measures included in the Securing a Clean Energy
Future Package are critical to unlocking the full potential of the package, as the
carbon price alone will not overcome most barriers to the uptake of energy efficiency.
ClimateWorks research suggests that an ESI can assist in addressing some of these
non-price barriers to unlock at least 12 MtCO2-e that would not have been
implemented with a carbon price alone, clearly showing the complementarity of an
Energy Savings Initiative.
ClimateWorks Australia submission
We support a national ESI whose key objective is to unlock socially cost-effective
emissions abatement opportunities across the Australian economy ... By unlocking
such investment, a national ESI reduces the overall cost of achieving Australia’s
emissions reductions targets.
The Climate Institute submission
An appropriate policy objective for a national Energy Savings Initiative
Having reviewed the evidence presented by stakeholders and the arguments put forward in
their submissions, the Working Group suggests that, for the purposes of further consideration
of a national Energy Savings Initiative, an appropriate scheme objective is: ‘to improve
Australia’s energy efficiency in order to help manage energy bills and improve productivity.’
A scheme with this objective could help consumers to manage energy costs by helping them
to improve the energy efficiency of their appliances, equipment, processes and building
fabric. This could enable consumers to reduce their energy consumption and cushion them
from rising energy prices.
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Improvements to energy efficiency might also have broad productivity benefits across the
economy. Of particular relevance to the energy sector, a national Energy Savings Initiative
that improves the productivity of Australia’s energy infrastructure could influence factors that
are presently driving energy price increases, particularly costs associated with network
infrastructure upgrades and peak electricity demand. Options for influencing peak demand
are discussed in Chapter 10.
The Working Group considers that a national scheme could assist low-income households to
become more energy efficient. However, the Working Group also acknowledges that there
may be more efficient and effective policy instruments for providing targeted support to this
section of the community. It is also possible that a portion of activities may occur in
low-income households even where a scheme does not specifically target this group. Through
the regulatory impact analysis, the Working Group will assess whether specific incentives or
requirements for a proportion of activities to take place in low-income households would be
the most appropriate option. The Working Group will also be mindful that a national scheme
should not adversely affect low-income households.
The Working Group considers that, with the carbon pricing mechanism now in place, further
consideration of a national Energy Savings Initiative should not include a primary objective
of reducing greenhouse gas emissions.
As discussed in Section 3.3, a scheme with the above objective could potentially be
considered complementary to the carbon pricing mechanism.
Working Group view: objectives for a national Energy Savings Initiative

For the purpose of the regulatory impact analysis, consideration of a national Energy
Savings Initiative should be based on the objective: ‘to improve Australia’s energy
efficiency in order to help manage energy bills and improve productivity.’

Further consideration of a national scheme should analyse how it could assist lowincome households to become more energy efficient. Through the regulatory impact
analysis, the Working Group will assess whether specific incentives or requirements
would be the most appropriate option for achieving this. The Working Group will also
be mindful that the analysis should assess whether a national scheme could adversely
impact low-income households.

Further analysis of a national scheme will not include consideration of an objective of
reducing Australia’s greenhouse gas emissions. However the Working Group notes
that further analysis will quantify the potential greenhouse gas abatement that could
be delivered under a national scheme.
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3.1
National consistency
As discussed in Chapter 2, in investigating the case for a national Energy Savings Initiative,
the Working Group will also consider whether there could be benefits to firms and
households from harmonising the rules and regulations of existing (and proposed) state-based
schemes.
There was broad support from a range of stakeholders for efforts to streamline and harmonise
state-based schemes. A number of stakeholders argued that schemes that operated in adjacent
jurisdictions have different objectives, rules and methodologies and this has introduced
inefficiencies. Some stakeholders noted that the methodologies for a range of similar
activities differ across schemes, with the effect that firms and households in different states
can be provided with different levels of support for undertaking the same activity. Energy
retailers with obligations under the state-based schemes and industry groups argued that
needing to understand and comply with multiple schemes generates administrative and
compliance costs that are higher than necessary.
...a nationally consistent and co-ordinated approach is necessary to maximise the
potential benefits.... amongst other things, the implementation design of energy
efficiency programs should aim to minimise transactions and compliance cost for all
parties.
Australian Industry Greenhouse Network
A single national scheme would have two major impacts:

it would create a single set of rules, replacing multiple existing sets of rules; and

it would extend the scope of energy savings obligations to Queensland, Tasmania,
Western Australia and the Northern Territory.
The majority of submissions that provided views on national consistency supported this
approach, including Essential Energy:
A single national scheme would reduce costs for Accredited Service Providers and
Accredited Certificate Providers (such as Essential Energy) through single
accreditation costs, a single compliance regime, reduced audit costs, national
accreditation of a product and lower administration costs.
Essential Energy submission
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Another option could be for the Commonwealth to work with those states and territories with
existing or planned schemes to harmonise rules around a range of scheme design features.
This approach would not extend the reach of energy efficiency obligations to jurisdictions
that do not have existing or planned schemes, but it could potentially reduce any costs
associated with having multiple different sets of rules. This approach could build upon work
begun by the New South Wales and Victorian governments to harmonise the Energy Savings
Scheme and Victorian Energy Efficiency Target.48
While most stakeholders that responded to this issue supported a single national approach
over harmonisation, (with some stating that harmonisation should be pursued only as a first
step towards a stand-alone national scheme), the Working Group is yet to explore
harmonisation in detail with stakeholders. Examples of stakeholder responses on this issue
included:
... a single national scheme is preferable to multiple disparate state schemes, and also
to multiple harmonised schemes. It would not have barriers to trading between
schemes, would have lower administrative costs and could have a greater pool from
which to draw liquidity.
Australian Financial Markets Association submission
To expand these [existing state schemes] to a national scheme would be of benefit for
those states where no opportunity currently exists.
Housing Industry Association submission
Total Environment Centre supports a national scheme and believes that a national
scheme will be more conducive to meeting environmental and energy saving
objectives. Experience with voluntary harmonisation has shown that the process is
flawed and complex. For example, feed-in tariffs for distributed generation have been
plagued in Australia by disparate and differing schemes. It is much easier to
promulgate a strong national scheme from the outset.
Total Environment Centre submission
Working Group view: national consistency
The regulatory impact analysis will explore the relative costs and benefits of harmonised
state-based schemes compared with a single national scheme.
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3.2
Complementarity with other major policies
The terms of reference (Appendix A) require the Working Group to:
consider and advise upon possible design options for a national Energy Savings
Initiative that would... complement the carbon pricing mechanism and the Renewable
Energy Target (RET), in line with the Council of Australian Governments’
Complementarity Principles... [and] complement wider Australian energy market
development objectives, including effective retail competition; efficient network
regulation; and increasing efficient demand-side participation.
This requirement recognises the importance of the carbon pricing mechanism, the RET and
the Australian energy markets in achieving the Australian Government’s commitment to
delivering a clean energy future and ensuring secure and efficient supply of energy.
Understanding complementarity to a carbon price
Prior to 2007, governments at both state and commonwealth levels implemented piecemeal
and overlapping policies designed to abate greenhouse gases. Since that time, the Australian
Government has made clear that pricing carbon is the central measure intended to achieve
this policy objective.
In this context, the decision to introduce a price on carbon was accompanied by a
commitment to review the variety of abatement policies already in place and to remove those
where a carbon price was likely to be more effective in delivering abatement. In 2008, the
Council of Australian Governments agreed a set of principles (the ‘COAG complementarity
principles’ – Box 3.1) to guide this exercise. The COAG principles recognise that a price on
carbon may need to be accompanied by a range of measures to address market failures that
are not adequately addressed by the carbon price signal.
Complementarity of a national Energy Savings Initiative to a carbon price
The preceding section highlights the Working Group's preliminary view on a possible
objective as follows: to improve Australia’s energy efficiency in order to help manage energy
bills and improve productivity.
This suggests a potential national Energy Savings Initiative would not prioritise or target
greenhouse gas abatement, reflecting that the market failures identified in Chapter 1 are
largely not associated with the externality of greenhouse gas emissions. However, as energy
in Australia is greenhouse-intensive, a national Energy Savings Initiative is likely to result in
some greenhouse gas abatement, regardless of its stated objective. The Working Group
therefore considers that it should be assessed against the all of the complementarity principles
to ensure that it complements the carbon pricing mechanism.
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Box 3.1 Council of Australian Governments – Complementarity Principles
Complementary measures should be assessed against the following principles.
1.
The measures are targeted at a market failure that is not expected to be adequately
addressed by the carbon price49 or that impinges on its effectiveness in driving emissions
reductions.
For example, research and development failures, common use infrastructure issues,
information failures and excess market power.
Complementary measures should adhere to the principles of efficiency, effectiveness, equity
and administrative simplicity and be kept under review. They may include:
a)
measures targeted at a market failure in a sector that is not covered by the carbon
price.
b)
measures for where the price signals provided by the carbon price are insufficient to
overcome other market failures that prevent the take-up of otherwise cost-effective
abatement measures.
c)
measures targeted at sectors of the economy where price signals may not be as
significant a driver of decision making (e.g. land use and planning).
d)
some measures in (a) or (b) may only need to be transitional depending on expected
changes in coverage or movements in the carbon price.
2.
Complementary measures should be tightly targeted to the market failure identified in
the above criteria that are amenable to government intervention. Where the measures are
regulatory they should meet best-practice regulatory principles, including that the benefits of
any government intervention should outweigh the costs.
3.
Complementary measures may also be targeted to manage the impacts of the carbon
price on particular sectors of the economy (for example to address equity or regional
development concerns). Where this is the case, in line with regulatory best-practice, the nonabatement objective should be clearly identified and it should be established that the measure
is the best method of attaining the objective.
4.
Where measures meet the above criteria, they should generally be implemented by the
level of government that is best able to deliver the measure. In determining this, consideration
should be given to which level of government has responsibility as defined by the
Constitution or convention/practice, the regulatory and compliance costs that will be imposed
on the community, and how the delivery of the measure is best coordinated or managed
across jurisdictions.
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The Working Group’s terms of reference require it to provide advice on possible
implementation arrangements for a national Energy Savings Initiative. The COAG principles
also require consideration of which level of government is most appropriate to implement a
policy. The Working Group’s final recommendations on which level of government (if any)
would be best placed to implement a white certificate scheme will be guided by analysis
considering the potential benefits of state-based schemes (which are perhaps better able to
reflect local circumstances in designing eligibility rules) versus the potential costs associated
with having multiple different sets of rules in operation.
On 13 April 2012, COAG established a cross-jurisdictional taskforce to consider how best to
fast track and rationalise carbon reduction and energy efficiency schemes. The taskforce will
provide a strategic oversight of COAG’s regulation and competition policy development
work.
To assist in progressing this work, COAG’s Select Council on Climate Change will develop
advice on how to fast track a rationalisation of programs that are not complementary to a
carbon price or are ineffective, inefficient or impose duplicative reporting requirements. The
SCCC has agreed that the COAG-agreed Complementarity Principles will be updated to
reflect the new legislation package to introduce a carbon price.
The Working Group will closely monitor progress in this area to ensure that work on a
possible national Energy Savings Initiative is consistent with outcomes from this COAG
process.
Renewable Energy Target
The Renewable Energy Target (RET) scheme creates a guaranteed market (backed by
legislation) for additional renewable energy, using a mechanism for tradeable certificates.
The RET separately supports large-scale renewable projects such as wind farms, and smallscale systems such as rooftop solar photovoltaic (PV) systems and solar water heaters.
To complement the RET, consideration of a national Energy Savings Initiative should cover
whether the scheme would duplicate the RET efforts, and test that it would not impede the
ability of the RET to encourage production of renewable energy. A national Energy Savings
Initiative that concentrated on consumption of energy (rather than production) would not
duplicate the RET. If a national Energy Savings Initiative was to credit improvements in
generation efficiency (discussed further in Chapter 7), careful consideration would need to be
given to how this would affect the creation of renewable energy certificates through
improvements to renewable energy generation.
The RET also supports ‘displacement technologies’: those that replace electricity with
renewable energy. Examples include solar water heaters and heat pumps. Here, there is more
potential for cross-over with a national Energy Savings Initiative. However, for the purposes
of the regulatory impact analysis, the Working Group will assume that any technology
currently supported by the RET would not be supported under a possible national Energy
Savings Initiative.
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Other types of displacement technologies may be eligible sources of credit under a national
Energy Savings Initiative (for example, high-efficiency gas water heaters, commercial-scale
water heating, and pool heating). Through the regulatory impact analysis, the Working Group
will consider the role of other displacement technologies could play in a possible national
Energy Savings Initiative.
Working Group view: complementarity with the Renewable Energy Target
For the purposes of the regulatory impact analysis, the Working Group will assume that any
technologies currently supported by the Renewable Energy Target would not be supported by
a national Energy Savings Initiative.
Energy markets
The National Energy Market (NEM) is designed to interact with consumers by sending them
efficient price signals. To the extent that consumers are able to respond efficiently to these
price signals, this will ensure that demand is efficiently balanced with supply.
There is much work underway to improve the way that price signals flow through the NEM.
The Power of Choice review undertaken by the Australian Energy Markets Commission
(AEMC) is one such example. The introduction of smart meters in some jurisdictions is
another.
As noted in Chapter 1, there are many factors that mean consumers find it difficult to respond
to these price signals. As a general principle, measures that are designed to overcome nonprice externalities (such as greenhouse gas emissions) or achieve environmental objectives in
the energy market are applied from outside the NEM framework, so that they can be reflected
solely in the price. This allows the NEM to continue to supply electricity in an economically
efficient manner.
This discussion is similarly relevant to the Wholesale Electricity Market in the South West
Interconnected System (SWIS), the major electricity grid that covers south-west Western
Australia. Should the government decide to adopt a national Energy Savings Initiative, it will
be important to ensure that activities taken up in Western Australia are transparent to the
Western Australian Independent Market Operator. This would ensure that changes to the
consumption profile in Western Australia are accounted for in its consumption projections,
particularly in relation to the operation of the Reserve Capacity Mechanism. This
transparency will also be crucial for other Australian energy market operators.
The Working Group notes that the AEMC’s Power of Choice review will consider the
linkages and role of ‘energy efficiency policies and measures in the context of the market and
regulatory arrangements that are required to facilitate efficient DSP’ (demand side
participation).50 The Working Group is engaging closely with the AEMC as it undertakes this
work, which will be an important input to the regulatory impact analysis. The Working Group
also notes that the Western Australian Strategic Energy Initiative considers similar matters
with regard to the SWIS and will monitor developments from this Initiative.
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The Working Group’s views on the treatment of energy market participants under a national
Energy Savings Initiative is discussed further in Section 6.1 (Obligated parties), Section 7.5
(Energy generation sector) and Section 7.6 (Energy networks sector). Possible options for the
treatment of peak electricity demand under a national scheme, including possible implications
for existing energy market arrangements and reforms, are outlined in Chapter 10.
3.3
Design principles for a national Energy Savings Initiative
The Issues Paper proposed a set of design principles, included in Table 3.1 below, which was
derived from the design principles previously recommended for a national Energy Savings
Initiative in the report by the Prime Minister’s Task Group on Energy Efficiency.51
The Issues Paper invited stakeholders to comment on whether any additional principles
should be considered for a national Energy Savings Initiative. Thirty-five submissions
expressly indicated in-principle or qualified support to the principles proposed in the above
table.
Stakeholders expressed broad support for designing a scheme around cost effectiveness,
administrative simplicity, minimal compliance complexity and maximising net societal
benefits. There was also broad support for designing a national Energy Savings Initiative that
is not overly prescriptive in the methods for assessing savings, and provides flexibility for
various types of entities (retailers, third party businesses or certificate providers/aggregators)
to generate savings.
Some stakeholders advocated additional principles targeted at positive outcomes for
low-income households. For example, the submission from Kildonan Uniting Care stated:
It is important for the NESI to include principles related to health and comfort of
participating households ... It is suggested that another key principle for the NESI be
ensuring positive outcomes for low income households. An emphasis on quality, and
making a difference for households, as well as the potential incentives for
organisations involved in carrying out activities related to the NESI, is required in
order to balance principles of efficiency and equity.
Kildonan Uniting Care submission
The Working Group agrees that it is important to consider the impacts of any scheme on
low-income households, and considers that this can be properly considered under the existing
design principle concerning fairness and equity.
A small number of stakeholders advocated an additional principle to focus on larger scale
energy efficiency improvements that involve higher upfront costs and longer pay back
periods. For example, the submission from Low Carbon Australia Limited recommended
more focus on large scale activities in the commercial and industrial sectors:
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Table 3.1: Design principles
Principle
Intent
1. An efficient
approach which
maximises net
benefits to society
The final design should represent the most efficient option that meets the
scheme objective(s), minimising transaction costs including those associated
with compliance with multiple schemes.
2. Effective at
delivering additional
improvements in
energy efficiency
A national Energy Savings Initiative should be designed to realise energy
efficiency opportunities beyond business as usual levels and in addition to the
improvements that will be delivered by the Carbon Price Mechanism and by
existing state schemes.
3. Complementary to
the Carbon Price
Mechanism and
energy market
arrangements
A national Energy Savings Initiative should overcome non-price barriers and
address residual market failures to the uptake of low cost energy efficiency
opportunities in accordance with the COAG Complementarity Principles.
4. Transparency
Governance arrangements such as setting and adjusting targets, and
assessing and rewarding activity should be clear, transparent and easily
understood to maintain investor confidence. The costs and benefits from a
national Energy Savings Initiative should be clearly demonstrated and
apparent to all.
5. Simplicity
A national Energy Savings Initiative should minimise administrative and
compliance complexity.
6.Fair and equitable
The benefits of a national Energy Savings Initiative should be equitably
distributed. Where a national Energy Savings Initiative imposes additional
costs on energy end users, these should be borne as equitably as possible.
Exclusions and offsets should be considered only where necessary for the
scheme to remain fair, equitable and cost effective.
A national Energy Savings Initiative should also be complementary with
existing electricity and gas market arrangements, as well as wider energy
market development objectives including: effective retail competition; efficient
network regulation; and increasing efficient demand-side participation.
Where a national Energy Savings Initiative is the most appropriate way to
deliver targeted assistance to disadvantaged and low-income households, it
should be designed to do so, while minimising any impact on the wider costs
and benefits of the scheme.
The design of a national Energy Savings Initiative should provide clear
transition arrangements for individuals or organisations that have made
investments under existing state-based schemes.
7. Flexibility
Flexibility should be built into the design of a national Energy Savings Initiative
to allow effective responses to changing circumstances and the uncertainties
associated with the pace of technological development and market
penetration; and to maintain the best possible mix of new and additional
activities.
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In addition to the principles listed in Table 2.1 of the Issues Paper, we suggest that
the proposed NESI should by design also encourage deeper retrofits involving
equipment with longer useful lives and longer payback periods (e.g. chillers).
Low Carbon Australia Limited submission
The Working Group considers that the cost and scope of eligible activities under any national
scheme should be guided by the principles of effectiveness and efficiency, and that there is no
need for an additional design principle to guide outcomes along these lines.
Working Group view: design principles
While the suggestions concerning additional design principles are noted, the Working Group
considers that the design principles outlined in Table 3.1 provide an appropriate overarching
framework to guide the regulatory impact analysis.
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45
A joint submission was provided by the members of the Australian Sustainable Built Environment Council’s (ASBEC) Climate Change
Task Group, comprising the Australian Institute of Architects, the Property Council of Australia, the Green Building Council of Australia,
the Planning Institute of Australia, and the Facility Management Association of Australia.
46
The Australian Council of Trade Unions notes that this figure is taken from the National Institute of Economic and Industry Research
Report for the Brotherhood of St Laurence, The impact of carbon prices on Victorian and Australian households, May 2007, p 14, available
at http://www.bsl.org.au/pdfs/NIEIR_Impact_of_carbon_prices_on_Vic_and_Aust_households_final_May2007.pdf.
47
The Australian Government announced, as part of the Clean Energy Future package, the Low Income Energy Efficiency Program
(LIEEP), the Community Energy Efficiency Program (CEEP) and the Home Energy Saver Scheme (HESS).
48
On 14 December 2011, the Premiers of New South Wales and Victoria announced that these states would be undertaking further work to
seek to harmonise their respective jurisdictional energy efficiency schemes.
49
On 4 May 2012, the Select Council on Climate Change agreed that the COAG Complementarity Principles be updated to replace the
references to the Carbon Pollution Reduction Scheme to reference ‘the carbon price’.
50
Australian Energy Market Commission, ‘Power of choice – giving consumers options in the way they use electricity: Directions Paper’,
2012, p. 188.
51
The Clean Energy Future plan and the carbon pricing mechanism were released in 2011 after the Task Group’s Report was prepared in
July 2010. To reflect these developments, the Issues Paper proposed a revised set of design principles.
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