1. What should the new VEET target be?
Other
Other (please specify a target and length):
[Required if 'Other' selected] *
6.9 Mt, 5 years
1a. Please outline why you prefer the
target you identified, or why you selected
"No response":
ATA believe there is a strong case to be
made for a target (or at least specifically
modelling a target) of a minimum of
6.9Mt/yr CO2-e for five years. The
Consultation Paper demonstrates that the
highest net benefits are associated with the
highest target modelled – that of 6.2Mt/yr
CO2-e. Targets above 6.2Mt have not been
modelled but projected based on
extrapolations from the existing modelling.
The projection for 6.9Mt shows that for
roughly the same overall net benefit, a higher
amount of abatement can be achieved. At
6.9Mt however, the energy market benefits
reduce considerably. This is a somewhat
secondary point however as the purpose of
the scheme is not to reduce electricity prices;
but to deliver abatement without placing
undue upward pressure on electricity prices.
As with all modelling, there is obviously a
confidence range or error band associated
with the analysis. Given the energy market
benefits associated with the 6.9Mt target are
only $11.6M, whilst it’s not stated, no doubt
the confidence range is larger than this
amount – meaning that over the longer term,
the energy market benefits may in reality
become negative. The key question therefore
is – what is the size of the confidence range
and at what point does the magnitude of the
potential increase in energy market costs (as
opposed to benefits) become unreasonable?
As an example, if as a worst case the energy
market costs (under the 6.9Mt target
scenario) were $50M, what level of impact
would this have on consumer bills each year
over the modelling period? ATA’s
suggestion would be that a small degree of
energy market cost, at the lower end of the
confidence range, is not in itself a bad thing
in the context of a policy which delivers
substantial net benefits overall and aims to
achieve a high level of abatement. In
addition, this energy market impact is
something that can be tracked over time and
can be reviewed to ensure it is maintained at
a reasonable level. Finally, all of the above
points to the fact that there would be value in
actually modelling the 6.9Mt target (as well
as the 10Mt) to ascertain more accurately
whether figures like the $11M net energy
market benefit is indeed correct. Ultimately,
all good modelling is constructed in a
conservative manner – to ensure that benefits
aren’t overstated over time. What this most
commonly leads to is understated benefits.
ATA has a high degree of confidence in the
skills and expertise of the modelling
consultants that have been employed for this
project, having reviewed much of their work
over many years. As such, this principle of
understated benefits is likely to be present
within the existing modelling work.
2. Comments are invited on the modelling
approach used to determine the costs and
benefits of the VEET scheme. Is there any
additional data or information that should
be considered?
ATA strongly supports the modelling
approach used as part of this review and
believes it to be a significant improvement on
the work that was done in early to mid 2014.
As with all modelling relating to carbon
abatement and energy efficiency, there
remain other, less easily-quantifiable benefits
that have not been stated in the consultation
documents. These include: •employment
benefits; •savings to the energy concessions
budget; •savings to the hardship programs of
energy retailers •savings in terms of public
health costs from a larger proportion of the
population living and working in healthier
and more comfortable temperatures. ATA is
not suggesting these wider benefits should be
modelled but that they should be recognised
in all documentation stating costs and
benefits – with the caveat that in reality, due
to their existence, any overall $ value netbenefits of the scheme will be understated.
3. Which greenhouse gas coefficient
should be used to quantify the reduction
in greenhouse gas emissions achieved by
the VEET scheme?
No response
3a. Please outline why you believe this
option is preferred, or why you selected
"No response":
4. The Department has valued greenhouse
gas emissions reductions attributed to the
VEET scheme by adopting a carbon
valuation series that was produced by the
Federal Climate Change Authority as part
of its 2014 Targets and Progress
Review.Please outline whether you think
this approach is appropriate for valuing
greenhouse gas emissions reductions over
the period 2016 to 2050?
ATA supports the inclusion of abatement
benefits in the modelling. The CCA prices
are well below the most recent price set in an
Australian market – i.e. the recent ERF price
($13.95/T). A better estimate of abatement
value is given by the social cost of carbon,
defined as the costs imposed on the wider
economy by GHG emissions. These
economic impacts include decreased
agricultural yields, harm to human health,
property damage from increased flood risk
and lower productivity. The US currently
uses a value of $37/T.
5. Is there a case to exclude any business
sector(s) from participation in the VEET
scheme?
No
5a. Please outline why this is your
preferred option, and comment on how
this should be implemented:
5b. Please outline why this is your
preferred option:
ATA’s understanding of Figure 11 on page
18 of the consultation paper is that at least for
large energy users, their net energy market
benefits under all targets and timeframes
modelled are positive – i.e. their bills go
down with VEET in place. As such,
irrespective of whether they participate in the
scheme by installing eligible technology,
large users will benefit from the scheme’s
existence. This appears to be a more mixed
picture for SME’s – however given that they
are more likely to be in a position to be a
direct beneficiary of technology, ATA would
question the exclusion of any SME sector
from overall participation.
6. Should the VEET scheme be amended
to better ensure support for low income
households?
Yes
6a. Please outline how the VEET scheme
could better support low income
households, and comment on why this
option should be preferred:
ATA supports the principle of trying to
partially target the scheme to better support
low income and vulnerable consumers.
Whilst it is not perfect, the only mechanism
by which ATA can see this being achieved is
through banding the scheme – such that a
certain proportion of the overall certificates
come from concession card holders (or other
eligibility mechanism). ATA understands in
detail the resistance of energy retailer’s to
this approach – and we agree that to a very
small degree this will increase scheme costs.
However it is well accepted these are costs
that retailers will in turn pass on to their
customer base. As such, this issue is less an
issue of cost impact and more a higher level
policy question – should Victorian’s more
broadly pay a small additional amount (an
amount that is unlikely to be detectable in the
final retail price of VEET to customers) in
order that low income and vulnerable
consumers can access the assistance they
need to get over the capital cost hurdle,
install efficient technology and reduce their
bills. Aside from this, ATA sit on a number
of working groups with retailers across the
country and are well aware of the ongoing
challenge of debt management for these
businesses – indeed a number of them are
looking at larger scale programs to try and
tackle energy efficiency with their own low
income customer base, in order to reduce the
size of their debt books. Surely there are
synergies here in that retailers need and want
a better outcome with regards to low income
and vulnerable consumers being on energy
plans they can afford into the longer term; as
well as the Victorian Government trying to
implement a scheme which can assist low
income consumers to achieve exactly that.
6b. Please outline why this is your
preferred option:
7. In addition to expanding the range of
energy efficiency activities available in
VEET, should any other action be taken
to target participation by certain groups?
No response
7a. Please outline the actions you believe
should be taken:
7b. Please outline why no other action
should be taken, or why you selected "No
response":
Addressed in Q6 above.
8. Please suggest up to five activities that
should be prioritised for revision or
1. Ceiling insulation - At least for residential,
if the building is not performing well from a
introduction to the VEET scheme. Please
outline why you believe these activities
should be prioritised.
thermal perspective, there are many
additional measures that are simply not worth
undertaking. 2. Split system air-conditioning
units for heating. Electric split system airconditioning units used for heating are
currently ineligible for the generation of
VEECs in gas-reticulated areas, based on the
historical assumption that gas is a more
affordable and less emissions-intensive
heating fuel relative to electricity. However,
in the current context of rapidly rising retail
gas prices and the emergence of highly
efficient electric appliances, those
assumptions no longer hold. Recent ATA
research has concluded that highly efficient
reverse cycle air-conditioners and heat
pumps offer lower-cost space heating
solutions for householders than gas
appliances.
9. Please suggest up to three changes
which should be made to improve the
VEET scheme. Please outline why you
believe these changes should be a priority.
Incentives for ‘whole of house’ upgrades A
‘whole of house’ approach beginning with a
comprehensive audit saves time and money
by identifying the best mix of efficiency
measures for each house. An audit also
allows for the delivery of complementary
behaviour change education, which is key to
installed measures actually delivering
promised savings. Providers should be
encouraged to deliver ‘deeper’
comprehensive household retrofits, for
example by allowing for the bundling of
complementary measures (eg. ceiling
insulation and down-light covers).
Appropriately targeted incentives could
encourage significant business and
employment growth in the energy services
sector, the creation of which has been one of
the notable successes of the VEET scheme. A
more integrated approach will also become
more important as the market for low-cost
measures commonly marketed through doorto-door sales becomes saturated.