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The Hon Peter Garrett AM MP
Minister for the Environment, Heritage and the Arts

Opening speech, Energy Efficiency Council National Conference

Rydges Hotel, Melbourne
12 November 2009

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Introduction

I would like to begin by acknowledging the traditional owners of the land on which we meet, the Wurundjeri People of the Kulin nation, and pay my respects to their elders, past and present.

Thank you, Peter Szental, for the introduction. It's a great pleasure to officially open this inaugural Energy Efficiency Council National Conference.

As Minister for the Environment, I oversee the largest energy efficiency agency in the Australian Government.

And I want to commend the Energy Efficiency Council, a relatively new organisation, for focusing on energy efficiency — it's an absolute priority for both of us.

I want to begin with the simple but pertinent observation that energy efficiency is much more than environmental policy.

Energy efficiency crosses into social policy and housing, transport and infrastructure, energy security, industry and employment.

The key point is energy efficiency offers potential benefits anywhere that we rely on energy, which is just about everywhere.

As United States Secretary of Energy, Steven Chu, a well-known advocate of energy efficiency, says:

“I cannot impress upon you how important energy efficiency is. It doesn't mean you eat lukewarm food and your beers are lukewarm. You can still have it; you just make a better thing.”

This illustrates a very important point, particularly at a time when there is so much scaremongering and misinformation about the costs of taking effective action on climate change.

The fact is, most energy efficiency improvements are not trade-offs in a zero-sum game — they are about smarter ways of achieving the same result.

So when you install solar hot water, you can still sing your way through a four-minute shower, but at the same time, you'll be saving money and reducing your carbon footprint.

To put it another way, through energy efficiency, you can have both a cold beer and a warm inner glow.

While energy efficiency has many potential benefits, it has one key driver for action from the Australian Government and from governments around the world — and that is reducing carbon pollution.

The evidence has never been clearer that dangerous climate change presents fundamental risks to our environment and our livelihood; our farmlands, our homes, our national parks and our urban infrastructure, all vulnerable to climate change impacts.

Just two weeks ago, a report from the Australian Parliament's House of Representatives Standing Committee on Climate, Water, Environment and the Arts identified some 700,000 homes and businesses around Australia's coastline potentially at risk from climate change impacts.

In Australia's north, we see significant climate change risks facing the Great Barrier Reef, a natural asset that is worth some $6 billion a year, with over 63,000 jobs associated with its tourism, fishing, cultural and recreational industries.

Considering these kinds of risks and costs brings home the destructive irresponsibility of those sceptics who advocate continued climate change denial and delay.

Energy efficiency as a priority

The Australian Government has identified energy efficiency as the critical second plank in our approach to tackling dangerous climate change, along side the Carbon Pollution Reduction Scheme.

This approach is about targeting barriers to energy efficiency improvement that are likely to persist, especially in the early years of an immature carbon price — barriers like up-front capital costs, poor information and split-incentives between tenants and landlords.

This approach is also about moving quickly and with ambition, recognising dangerous climate change is an urgent challenge requiring an immediate response.

As you would know, the International Energy Agency has identified energy efficiency as providing the largest potential source of emissions reductions out to 2030 under a 450 parts per million reference scenario.

I was pleased to take the opportunity to discuss energy efficiency with the Agency's Executive Director, Mr Nobuo Tanaka, when I was in Europe earlier this year.

And I am sure Dr Nigel Jollands, the IEA's head of energy efficiency, will expand on this potential when he speaks to you later this morning.

The Government's approach also recognises that effective energy efficiency measures are generally those that have a 'negative cost' — an overall economic and environmental benefit — outweighing any up-front investment.

The identification by consultants McKinsey and Company that if we can unlock these profitable energy efficiency measures in Australia, they would provide enough savings by 2020 to pay for costly abatement up to a carbon price of $62 a tonne, suggests we can pay for a significant amount of more expensive abatement by virtue of the cheap abatement from energy efficiency, before we even start contemplating an overall cost to the economy.

A comprehensive approach

That's why the National Strategy on Energy Efficiency recently agreed between the Australian Government and all the states and territories is so important.

By providing an ambitious long-term work-plan on energy efficiency out to 2020, we are coordinating energy efficiency measures around a clear and nationally consistent framework.

The Strategy includes measures to increase the minimum energy efficiency standards for commercial and residential buildings, scheduled for the 2010 update of the Building Code of Australia, subject to the outcomes of the current regulatory impact process.

The Government will be keen to see that housing affordability is given consideration in this process, both in the upfront affordability of new homes, and importantly also in the costs of running those homes, day in day out, year in year out.

Looking to the future, the Strategy will reform the way minimum standards, energy ratings and assessments are conducted for buildings, setting a platform for continuous improvement out to 2020.

This is all about preventing carbon lock-in, for example, in the 130,000 new homes that are built every year.

We simply cannot afford to perpetuate the legacy of a built environment that costs more to live in and work in that it should, and that currently contributes around 20 per cent of Australia's carbon pollution.

Commercial building energy efficiency

The question often asked about energy efficiency is especially true of the commercial building sector, namely, if it's so good, why isn't everyone already doing it?

Part of the answer is that it is not presently possible for prospective buyers and tenants to easily factor environmental considerations and ongoing energy costs into their decision making.

As office buildings are one of the most significant contributors to emissions from the commercial sector, this is clearly an important gap and one that goes to the heart of commercial property transactions.

So I'm especially pleased to announce today that for the first time, Australian governments have agreed to a new national scheme to improve the energy efficiency of commercial office buildings by introducing regulations that will require owners to provide energy efficiency information when selling or leasing.

This is a signal and highly important measure that will produce immediate and lasting benefits.

Starting in the second half of 2010, any building owner that is planning on selling or leasing office space covering more than 2,000 square metres will need to provide up-todate energy efficiency information.

This means all parties — the building owner and potential buyers or tenants — will have access to consistent, credible and meaningful information about a building's energy efficiency to inform decisions when they buy or rent.

The disclosure scheme will be a tremendous driver for green innovation and competition in the commercial office market.

Only this week, reports of a study looking at the US market indicated greener buildings attracted 6 per cent higher effective rents and sold at a premium of around 16 per cent compared to the rest of the market.

I anticipate the disclosure scheme will help drive demand for greener offices that are not only more comfortable to work in, but can also deliver more motivated and productive workers and support clean energy jobs.

The scheme will also apply to office buildings owned by the Australian Government, in line with the Government's commitments under the National Strategy on Energy Efficiency.

Owners who don't comply with this new requirement will risk a penalty.

Although given the number of sustainability leaders in the commercial building sector, I suspect the challenge will be less about compliance and more about keeping pace with a competitive market.

This is an important measure which we will develop, along with more stringent minimum energy performance standards, to greatly accelerate the transformation in the commercial building sector.

But it is not the only string in our energy efficient bow when it comes to targeting greenhouse savings from commercial buildings.

Just last week, my colleague, Minster Kim Carr, announced another 37 projects under the third round of the Green Building Fund, bringing projected savings from projects under the fund so far to more than 101,000 tonnes of greenhouse gas emissions a year, generating investment of almost $75 million.

Additionally, through the Energy Efficiency Trust, the Government will provide $50 million in seed funding for innovative approaches to energy efficiency investment, helping to showcase and mainstream these approaches across the commercial building sector and business operations more broadly.

This is a dynamic set of measures for commercial buildings, spanning carefully targeted regulation, competitive grants and innovative financing.

I also well understand that this is just the beginning of an exciting and transformative journey.

So tomorrow, I will be convening the inaugural Built Environment Sustainability Roundtable, fulfilling a commitment made just three months ago to establish a regular government-industry dialogue on sustainability in the built environment.

I expect this will become the first in regular high-level consultations, with the potential to vary representation as we explore the many sustainability issues and opportunities confronting the built environment sector.

Appliance energy efficiency

Of course, it's not just the way we build our homes and workplaces, it's the appliances in our homes that we use almost every moment of every day.

The Government is accelerating and expanding its approach to appliance energy efficiency through minimum standards and energy rating labels.

Last week, I announced that new energy efficiency standards for TVs, household lighting and whitegoods are now in place.

Desktop and laptop computers, external power chargers, television set-top boxes, hot water systems, computer monitors and swimming pool pumps will also have standards in place between now and late 2010.

This may be the quiet achiever of climate change policy, but the achievements are staggering, with reductions in greenhouse gas emissions and the dollar savings of a high order.

The equipment energy efficiency program is expected to deliver energy savings of 32,000 gigawatt hours per year by 2020, the equivalent of up to 14 per cent of all the electricity generated in Australia in 2006-07.

This will prevent up to 19.5 million tonnes of carbon emissions every year by 2020, save the Australian economy up to $22 billion over the next 16 years, and save Australian householders up to $5 billion per year by 2020.

Smart Grid, Smart City

The projected savings from appliance energy efficiency show that with the right amount of community and industry engagement, a little bit of innovation can go a long way.

This is very much the case when it comes to Australia's electricity grid, a critical part of our economic infrastructure which is overdue for modernisation.

Smart grid technologies have the potential to transform our energy distribution networks from a 'horse and buggy' approach to an 'energy Internet'.

That is why the Government will invest up to $100 million in partnership with the energy and communications sectors to roll out Australia's first commercial-scale smart grid, through Smart Grid, Smart City.

Smart grid applications can:

Based on very early estimates, smart grids could deliver minimum gross annual benefits of around $5 billion to the economy, including a reduction of up to 3.5 million tonnes of carbon emissions.

On 29 October, the Government invited industry bids to deliver the Smart Grid, Smart City demonstration project.

Consortia, led by an electricity distributor and likely to include electricity retailers, product and service suppliers, governments, academic bodies, consumer groups and other NGOs, have until 28 January 2010 to submit their bids.

This is an extremely exciting project, not only in terms of technology deployment but in empowering energy consumers throughout our homes and workplaces, and I very much look forward to receiving industry bids early in the new year.

The Government's commitment to energy efficiency

When we came to office in November 2007, we were confronted with massive inertia sitting in the system — the legacy of twelve inactive years when clean energy jobs were left stalled in marginalised industries and Australia's proportion of renewable energy went backwards.

Twelve years when so much low-hanging fruit of energy efficiency was left withering on the vine.

Twelve years when so many opportunities and potential benefits were left untapped.

And now, in the countdown to international negotiations at Copenhagen that will define the response of current and future generations to dangerous climate change, we are seeing this deficit of inaction, coupled with a persistently opportunistic and irresponsible approach from the Coalition parties that defined their time in office and now pollutes their policy approach in this area.

This is climate change scepticism 2.0 — like the new Vegemite, it's a slightly different flavour, but just as brown.

For example, on 4 February this year, the Shadow Minister for Climate Change, Mr Hunt, promised the Opposition would “come back with more details of an energy efficiency package.”

Well, they never came back with a package — they just came back with a vote against the Energy Efficient Homes Package, already the largest energy efficiency measure ever undertaken in Australia.

The Opposition hate the fact this package is supporting jobs, and they hate the fact it is improving energy efficiency, because they opposed it outright.

Just last week, the Shadow Minister for Sustainable Development, Mr Billson, talked about the Green Loans Program as “another example of a missed opportunity to make sustainability and energy efficiency gains in our built environment.”

I welcome the opportunity to have a debate around Green Loans, because this program is a key measure in the residential sector, set to provide tailored energy efficiency advice for up to 360,000 Australian households.

When Green Loans was announced before the 2007 election, then Environment Minister, Malcolm Turnbull, said it was well meaning but would never work.

Well, here's some news, Green Loans is well meaning, and Australian households are signing up in droves.

Since the program was launched earlier this year, we have seen more than 60,000 home sustainability assessments booked, with around 40,000 already completed.

An important part of the Government's energy efficiency agenda, Green Loans supports clean energy jobs, with a trained and skilled workforce of more than 1,700 sustainability assessors already contracted to my Department.

The program also makes a direct link between up-front investments in energy efficiency and potential savings over time.

While not every household will proceed from a sustainability assessment to a Green Loan, financial partners have already received over 700 applications, and this is growing by the week.

I welcome the announcement today of the ANZ Bank who have joined the other financial institutions offering interest-free Green Loans up to $10,000 as partners of the Green Loans Program.

Earlier this week, Westpac Banking Corporation also signed on as a financial partner offering loans from November 16.

This combined with our other 14 financial partners means the Green Loans Program is now offering major, national financial coverage to Australians looking to improve the energy and water efficiency of their homes.

I also welcome having a debate around so-called 'missed opportunities on energy efficiency', but if we're serious, let's do it on the numbers.

Since February this year, the Government's Energy Efficient Homes Package has provided ceiling insulation for almost 600,000 Australian households, and solar hot water for around another 100,000.

This compares to around 4,000 solar hot water rebate applications received over the time of the previous Government — and they did nothing on insulation.

To put this in perspective, in the last nine months, we have made around one in 12 Australian households more energy efficient, and by the conclusion of the rollout, we will have reached more than one-quarter of Australian homes.

The Energy Efficient Homes Package has the potential to reduce emissions by up to 30 million tonnes out to 2020, and of course many homes will enjoy cost-savings and carbon reductions for decades longer.

This level of ambition and this level of delivery is absolutely without precedent in this country.

Australian manufacturers have put on extra shifts, running 24/7, and we have seen proof of why insulation is an effective stimulus measure, with around 70 per cent of the value of each installation downstream from the factory gate in sales, distribution and installation.

For example, there are over 8,500 insulation installer businesses registered to take part in the Home Insulation Program, which translates into many thousands more individual installers on the ground and in rooftops around Australia.

Last week, we made sensible changes to the package, further boosting safety requirements and recalibrating the level of assistance in line with increasing consumer confidence as the economy continues to recover.

Conclusion

The fact is, the Rudd Government is delivering on support for Australian households to go green, and that support is simply without parallel.

After less than two years, the Government is on track to fund more than 120,000 installations of solar panels, compared to just 10,500 rebates funded over the entire period of the previous Government.

Our total commitment to solar PV rebates is close to $1 billion — for a program that had an annual budget of around $6 million just three years ago.

We are progressing increased energy efficiency standards for all new buildings in Australia, including a six-star minimum standard for new homes — when standards for homes did not even enter the Building Code of Australia until 2003.

We have agreed a National Strategy on Energy Efficiency to provide national leadership where previously there was a vacuum, and commercial building initiatives like mandatory disclosure and the Green Building Fund are the first time an Australian Government has taken this kind of action.

Much has been achieved in a short space of time, but I recognise there is a great deal left to do if we are to maximise Australia's energy efficiency potential.

Moving our reliance on energy from a relationship of co-dependence to independence, from passive consumers to active and informed communities, with a built environment that is not an increasing load on an overburdened planet but carbon positive — this is our ultimate, low-cost, low-carbon, genuinely sustainable destination.

The good news is we now have the national leadership, the political will and the policy framework to undertake this journey.

To update a popular phrase — you can't turn the Queen Mary around overnight, but you can give it a retrofit.

I look forward to your continuing support, and to the contributions of Australia's energy efficiency sector in shaping this agenda as we implement it over the years ahead.

Thank you.

[ENDS]

Commonwealth of Australia