Australia’s urgent need to boost energy efficiency and productivity Media Release

Jul 13, 2008 - 5:00am

Australia will squander opportunities to cut the cost of reducing emissions unless it tackles its poor performance in energy efficiency and productivity, according to an expert report released by the Climate Institute today.

“This research shows that Australia’s energy productivity lags behind other developed countries across many sectors of the economy and that there are significant opportunities to save energy and cut costs with a comprehensive energy efficiency strategy,” said John Connor, CEO of the Climate Institute.

“This week’s Government Green Paper needs to put a 2015 timeline on its pre-election promise to put Australia ‘at the forefront of OECD energy efficiency improvement’.

“There has been a lot of focus lately on the cost of introducing an emissions trading scheme and unless the Government formulates policies to address market failures and remove roadblocks to energy saving innovation, the opportunities to cut these costs will be squandered.”

The report shows that in many sectors of our economy developed and developing countries are more competitive in energy productivity, spurring the need for public and private action.

"In manufacturing we’re the second most inefficient of the OECD countries studied - and that’s taking into account the high proportion of raw materials production. And Africa now leads the way with the most efficient aluminium smelters, weakening claims that if manufacturing processes go off-shore emissions will increase,” Mr Connor said.

“On the flip side this report also shows that there are major opportunities for energy savings in residential, commercial and manufacturing – possibly up to 73%, 70% and 46%, respectively.  The previous Government’s Energy White Paper shows that the uptake of commercial energy efficiency opportunities alone could grow our economy by about $1 billion a year.”

The Climate Institute commissioned McLennan Magasanik Associates (MMA) to review national energy efficiency options for Australia. Stage 1 of this study, released today, analyses Australia’s energy profile and assesses barriers and opportunities for energy efficiency.

Other findings were that among OECD countries studied Australia:

  • has the third most energy hungry economy - with only Canada and US worse performers
  • has the third highest energy use for passenger kilometres travelled
  • improved its service sector efficiency by only 6% between1990-2004. In contrast Germany achieved 43%, and the UK 23%

The report identified potential priority policy actions on information, performance standards and financial support.  It finds the case for intervention is strong during the initial period of emissions trading.  Mandatory targets could also be justified if an emissions trading scheme starts with soft or capped carbon price signals – an option considered by the Garnaut Review’s Draft Report.

“Australia needs to dramatically improve its energy efficiency and productivity and Government action is vital on that front. We’re being left behind in the energy efficiency race and we urgently need policies to reverse our rising pollution by 2012 and make our economy competitive in the emerging global low-carbon economy,” added John Connor.

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