ON Thursday last week, Labor Party Senators lined up with the government, Palmer United Party and crossbench independent senators to repeal the large-scale Energy Efficiency Opportunities (EEO) program set up with bipartisan support in 2006 under the Howard Government. In a division in the Senate of 55 votes to 10, only the Greens senators opposed the dumping of this program, which had made substantial business energy savings of over $800 million and an 8.21-megatonne reduction in carbon emissions.
The EEO program was recognised by the International Energy Agency as a world-class program helping businesses to save energy and a key element of the energy efficiency policy framework to address climate change.
The scheme has since been copied by the UK to drive transformation of energy consumption by large businesses. “Just as we are dumping it, they are picking it up because they realise it has been so successful in Australia and could be even more successful,” observed Greens leader Christine Milne.
The Abbott Government proposed the legislative repeal of this program in the May budget papers as the Energy Efficiency Opportunities (Repeal) Bill 2014. The conditions in the repeal will apply retrospectively from June 29, 2014, for affected businesses.
“Today in the Senate, Labor has voted with the government to repeal the Energy Efficiency Opportunities program,” Senator Janet Rice said in a Facebook post. “The Energy Efficiency Opportunities program required high energy using businesses to assess their energy use and identify cost effective energy saving opportunities. The government, supported by Labor and the other crossbench Senators, reckon that the market will now drive energy efficiency.”
Labor Senator Lisa Singh outlined the Labor Party attitude to the bill during the second reading of speeches in the Senate. Singh articulated: “This program has enjoyed bipartisan support. It has provided, as I have outlined, a benefit both to the bottom line of businesses and to the environment and there is still more benefit which could be derived from continuing this program. As with the potential abolition of its own renewable energy target, this is just another example of this government’s misguided ideology overwhelming its understanding of the effective, logical energy policy instituted by the Howard Government. The repeal of the program will be unhindered by the opposition, but we will not pretend that this means we support it. We do not support the repeal of good policy that has future life in it, as this policy does, and we do not support the blind, ideological argument put forward by this government that it is repealing the Energy Efficiency Opportunities program in order to reduce red tape. This is a policy that has been very good at creating energy efficiency opportunities for industry, for buildings, for consumers, for households, for just about every Australian. I cannot understand this government’s stupid, ideological decision to get rid of it.”
Senator Christine Milne, leader of the Greens, accused the Labor Party of hypocrisy saying: “It is really disingenuous and dishonest of the Labor Party to have one of its senators give an entire speech on why we should keep the Energy Efficiency Opportunities program, how good this program has been and why energy efficiency is so important and then, at the end, say, ‘However, we will not hinder the government in repealing it’. This why so many people are disengaged and fed up with politics: people tell them one thing in public and then do an entirely different thing behind closed doors.”
The Coalition’s 2013 election policies did not directly include a policy on the future of the EEO program. This is another major change the Abbott Government had no electoral mandate for introducing, particularly as it was originally introduced and run with bipartisan support. Energy efficiency measures may now be left to being funded by reverse auction from the government’s proposed Emissions Reduction Fund, if it ever gets legislated through parliament.
Fifth estate reported in May on the program review in mid 2013 that the program had conservatively, “been responsible for 40 per cent of the energy efficiency improvements the Australian industrial sector had enjoyed since its introduction. This had resulted in net financial savings of $808 million and a reduction in greenhouse gas emissions of 8.21 megatonnes of carbon dioxide equivalent directly attributable to the program.”
This program was mandatory for companies that used more than 0.5 petajoules per year of energy. It applied to 464 companies. The repeal will save Australian industry approximately $17.7 million annually in compliance costs, according to the government.
The program closure was slammed by the Energy Efficiency Council in May in a Business Spectator article. “The Abbott Government promised to help lower energy bills, but today they’ve broken it by cutting the Energy Efficiency Opportunities program. This world-class program helped companies find ways to save energy and lower their bills,” said council chief executive Rob Murray-Leach. “Every dollar invested in the program delivered $2.90 of benefits to Australian business. Cutting funding to help businesses save energy is just going to hurt the economy.”
The Australian Petroleum Production and Exploration Association (APPEA) welcomed the repeal. APPEA chief executive David Byers said in a media release: “The Australian oil and gas industry has long maintained that the EEO imposed a range of unnecessary administrative and compliance costs on participants that did nothing to enhance energy efficiency.”
The American Council for an Energy-Efficient Economy has ranked Australia at number 10 (See Australian scorecard PDF) for energy efficiency in its global ranking of 16 Leading World Economies on energy efficiency released in July 2014, but has warned: “The country has dramatically reduced its investment in efficiency and has rolled back its efficiency incentive programs, causing its score to decline.”