Managing energy use is the key to transition to renewables

A new report by the Energy Efficiency Council shows that other countries are delivering huge cuts to energy bills by managing how and when they use energy, while Australia has made almost no progress in the past three years.

• The new ‘The World’s First Fuel’ report reveals that, if Australia adopted leading international practices in energy efficiency, we could:
• Slash the energy bills of households and businesses by $7.7 billion a year;
• Create 120,000 extra jobs; and
• Meet over half of Australia’s commitment to reduce emissions by 26-28 per cent by 2030, and over a third of a more ambitious target to cut emissions by 50 per cent; and
• Support the transition to renewable energy and electric vehicles. Germany has adopted the principle ‘Energy Efficiency First’ as part of its transition to renewable energy, the Energiewende.

Major global economies, including China, Germany, India, Japan and the United States are making huge strides to improve their energy efficiency and adjust when they use energy – collectively called ‘energy management’.

Global private and public investment in energy efficiency was AU$346 billion in 2018. These efforts are delivering huge dividends, with energy efficiency:

• Reducing energy bills: Energy efficiency reduces German families’ energy bills by 30 per cent, saving the average household AU$790 each year.
• Ensuring energy security: After the 2011 Fukushima tsunami, energy management in Japan reduced peak demand by 19 per cent. By 2016 energy management had replaced 39 per cent of the output of 49 nuclear generators that had been closed after the disaster.
• Reducing emissions: Energy management has delivered by far the largest reductions in global greenhouse gas emissions this century.
• Creating economic growth and jobs: Energy efficiency improvements increased global GDP by an estimated AU$2.8 trillion in 2017. In California alone there are an estimated 310,433 jobs in energy efficiency.

Global leaders in energy management share a key feature – they treat energy management as a core strategy for meeting the energy needs of homes and businesses. They recognise that energy management provides real capacity to energy markets, because every unit of energy that isn’t used is energy that doesn’t need to be generated.

This is not a marginal issue – energy efficiency improvements since 2000 reduced China’s annual energy demand in 2017 by near to 12 per cent. In other words, in 2017 China saved more than twice as much energy as Australia used that year.

In fact, improvements in energy efficiency between 1974 and 2010 delivered more capacity to 11 major economies than any other fuel, including coal, oil and renewable generation. As a result, the International Energy Agency (IEA) has described energy efficiency as the ‘first fuel’. What’s more, energy efficiency can deliver capacity at a much lower cost than energy supply.

Energy management is going to become more, not less, important, as the proportion of generation coming from renewable energy rises. Reducing our demand for energy and better aligning when we generate and use energy will dramatically reduce the cost of generation, storage and network infrastructure.

This is why our global competitors are aggressively pursuing energy efficiency – they have recognised that it is just as important as energy supply in their energy markets.

In contrast, Australia has barely begun to tap the potential of energy efficiency. We have made some effort on energy efficiency, and these are delivering real benefits to Australian homes and businesses.

However, an analysis of the world’s 25 largest energy consuming countries ranked Australia as the worst developed country for energy efficiency policy and performance. As a result, our energy bills and greenhouse gas emissions are far higher than they need to be.

The good news is that by acting decisively we can dramatically reduce Australians’ energy bills, boost energy security, and reduce our greenhouse gas emissions. If we adopt well-established energy management policies, practices and technologies from overseas we can cut energy bills for Australian families and businesses, reduce emissions a smooth the journey to clean energy.

The report examines key energy management policies in other countries. It is not intended as an exhaustive review of international practice. Instead it highlights a number of policies and programs that Australia should adopt to ensure that our energy system is affordable, reliable and sustainable, such as:

• Reforming institutions and introducing policies to ensure that we meet and exceed our national target to improve energy productivity by 40 per cent by 2030.
• Adopting the principle ‘energy efficiency first’ to ensure that our energy strategies, policies and markets deliver the right mix of energy supply and energy management.
• Ensure that there is either a national energy efficiency scheme (EES) or an EES operating in every state and territory.Help manufacturers identify and invest in opportunities to manage energy.Introduce strong minimum standards for appliances, buildings and vehicles.The full report can be found here.Rob Murray-Leach, Head of Policy, Energy Efficiency Council