Mar 07, 2012 - 12:00am
The Climate Institute regards a national Energy Savings Initiative (ESI) as an important complement to Australia’s emissions trading scheme. We support a national ESI whose key objective is to unlock socially cost-effective emissions abatement opportunities across the Australian economy.
A scheme with this objective satisfies the conditions for complementarity to a carbon price: it addresses significant market failures that are not resolved solely by the carbon price package. These failures prevent profitable investment in energy efficiency in the residential, commercial and industrial sectors, and forestall socially cost-effective domestic emissions abatement. By unlocking such investment, a national ESI reduces the overall cost of achieving Australia’s emissions reduction targets. Energy efficiency can achieve more than a third of Australia’s 5 per cent abatement target and a quarter of our 25 per cent target at net negative cost. Without the savings achieved through energy efficiency, Australia’s abatement task becomes more expensive.