Further to the announcement in the June Energy Statement, the Minister for Industry, Tourism and Resources, Mr Ian Macfarlane, and the Parliamentary Secretary to the Treasurer, Mr Ross Cameron, today asked the Productivity Commission to inquire into the economic and environmental potential of energy efficiency.
Improving Australia's energy efficiency performance is a key part of the Government's policy to deliver energy prosperity, security and sustainability. Increasing the uptake of commercially attractive energy efficiency opportunities would delivery substantial economic and environmental benefits.
This inquiry will provide further information on the potential benefits of improved energy efficiency. Mr Macfarlane said that the inquiry will inform the development of the National Framework for Energy Efficiency, stage one of which was announced by the Ministerial Council on Energy on 27 August 2004.
The Productivity Commission has been asked to report back to the Government within twelve months. A copy of the terms of reference is attached.
People wishing to obtain further information on the inquiry or register their interest can do so by visiting the Productivity Commission's website at: www.pc.gov.au or by contacting the Commission directly on (02) 6240 3239.
31 August 2004
INQUIRY INTO THE ECONOMIC AND ENVIRONMENTAL POTENTIAL OFFERED BY ENERGY EFFICIENCY
Productivity Commission Act 1998
I, ROSS CAMERON, Parliamentary Secretary to the Treasurer, pursuant to Parts 2 and 3 of the Productivity Commission Act 1998, hereby request that the Productivity Commission undertake an inquiry into the economic and environmental potential offered by energy efficiency and report within 12months of receipt of this reference. The Commission is to hold hearings for the purpose of the inquiry.
Australia's access to low cost, reliable energy is a source of competitive advantage for Australia. However, Australia's historic energy efficiency performance has been weak in comparison with other OECD countries. In this context, improvements in energy use which are cost-effective for individual producers and consumers have the potential to enhance Australia's economic prosperity and at the same time lower Australia's greenhouse signature.
Energy efficiency in this context refers to maintaining or increasing the level of useful output or outcome delivered, while reducing energy consumption, and encompasses both supply side and demand side efficiency.
Scope of the Inquiry
The Commission is to examine and report on the economic and environmental potential offered by energy efficiency improvements which are cost-effective for individual producers and consumers, including through consideration of:
- the economic and environmental costs and benefits arising from energy efficiency improvements, including, but not limited to, research undertaken in the context of the National Framework for Energy Efficiency and international studies;
- existing and recent Australian and state government energy efficiency programmes, including consideration of the level of coordination between these programmes and comparison with international experiences;
- barriers and impediments to improved energy efficiency, including, but not limited to, information asymmetries and implementation costs;
- the potential for energy efficiency improvements which are cost-effective for individual producers and consumers arising from actions including:
- energy market reform to facilitate improved demand and supply management, including, but not limited to, more efficient cost-reflective price signalling in the market, particularly at peak times;
- improved financial information on energy efficiency, including, but not limited to, provision of additional financial information on energy efficiency to firms' internal and external investors and decision makers,
- improved energy efficiency information, including, but not limited to, provision of additional energy efficiency information in relation to plant and equipment, appliances, vehicles and fuels, and residential and non-residential buildings;
- minimum energy efficiency standards, including, but not limited to, minimum standards for plant and equipment, appliances, vehicles and fuels, and residential and non-residential buildings;
- new and improved technologies and equipment, including, but not limited to, improved technologies in relation to plant and equipment, appliances, vehicles and fuels, and residential and non-residential buildings,
- financial incentives for improving energy efficiency, including , but not limited to subsidies, private sector rebates or discounts and levies on energy use; and
- improved operational practices at the level of consumers and households, governments, and the industrial and commercial sectors.
- policy options for energy efficiency improvements which are cost-effective for individual producers and consumers, including:
- improving industrial and commercial energy efficiency, including, but not limited to, energy efficiency agreements, and increased disclosure through public energy efficiency reporting;
- improving consumer and household energy efficiency;
- improving the efficiency of government energy use;
- improving transport related energy efficiency, including, but not limited to, urban planning, congestion pricing, intelligent transport systems, travel demand management, and increased efficiencies in the business and freight sectors (including opportunities for better matching of transport choices with transport tasks undertaken); and
- introducing a national energy efficiency target, including, but not limited to, the establishment of an annual requirement for major users of stationary energy to generate, or otherwise acquire, a target level of efficiency related energy savings.
The Commission is to provide both a draft and a final report. The Government will consider the Commission's recommendations, and its response will be announced as soon as possible after the receipt of the Commission's report.