A draft plan for the future of energy

On Tuesday 22 November 2016, the NSW Minister for the Environment, Mark Speakman, gave the opening address at a public briefing on the NSW Government's Environmental Future Funding Package, which includes the Draft Plan to Save NSW Energy and Money.

Luke Menzel, CEO of the Energy Efficiency Council, was invited to respond to the Minister. This is an edited version of his address.

Thank-you for the invitation, and firstly can I acknowledge Minister Speakman, Martijn Wilder AM, and other distinguished guests. I know we have a busy session ahead, so I'm just going to make two broad comments in response to the Minister's address.

Expanding the conversation around energy

Firstly, an observation on the overarching framework that has been proposed here.

For the last decade, Australia's energy policy debate has centred almost exclusively on the way we generate and distribute energy – the supply side of the market. Specifically, the debate has focused on the relative merits of coal versus various forms of renewable generation.

Now there is no doubt this is an absolutely critical discussion. But with this set of draft plans – and particularly the NSW Climate Change Policy Framework – the NSW Government has expanded the conversation, and highlighted something important.

Managing the transformation underway in our energy system requires more than a focus on how we generate energy. It also calls for a much smarter approach to the way we use energy – the demand side of the energy market.

Energy systems are changing rapidly all over the world, and jurisdictions like California that are effectively managing this transformation have one thing in common: they are taking a balanced and integrated approach to ramping up investment in renewables on the one hand, and energy efficiency and demand management on the other.

Why? Because they understand that the transition to lower carbon forms of generation will be quicker – and much cheaper – if they drive cost effective energy efficiency at the same time.

As has been noted, the NSW Government is proposing to spend up to $200 million on renewables and advanced energy over five years. It is also proposing up to $200 million of investment in energy efficiency over the same period. These are major, balanced investments that support the transition taking place on both the supply and the demand side of the market. For me, this balanced approach is testament to a solid policy framework.

Sensible actions with huge community benefits

As CEO of the Energy Efficiency Council, my second comment has to focus on the Draft Plan to Save NSW Energy and Money, and the detailed policy work that is evident in this document.

With the Draft Plan, the NSW Government has underlined the importance of government policy in unlocking the energy efficiency opportunity. A significant ramp up of energy efficiency is always challenging, because there are different drivers and barriers in every part of the economy.

As such, it takes careful, considered action from government – tailored to the unique circumstances of each sector – to realise the big opportunities we have to use energy more efficiently and productively.

Reading the Draft Plan, it’s clear the NSW Government has carefully considered its role in supporting businesses and households to become more energy efficient.

This includes increasing energy standards for new commercial buildings to ensure these long-lived assets aren't hogging energy for the next 40 years. Supporting large energy users to investigate energy savings opportunities that drive business productivity.  Raising energy efficiency appliance standards so mums and dads aren't stuck with poorly-performing appliances that send their energy bills skyrocketing.

These are just some of the sensible measures the NSW Government is proposing. They will have huge benefits for the entire community in the form of raw bill savings – up to $17 billion dollars by 2050 – not to mention broader benefits in terms of productivity, comfort, community health and of course carbon mitigation.

Leadership deserves recognition

Just last week we at the Energy Efficiency Council hosted the Head of Energy Efficiency from the International Energy Agency, Dr. Brian Motherway, here in Sydney. While he was here, he made two particularly strong points.

Firstly, ambitious energy efficiency is absolutely central to any and every conceivable solution to climate change. Secondly, good policy is the key difference between the jurisdictions that are making substantive progress on energy efficiency, and those that are being left behind.

I know the NSW Government is at the very start of a consultation process, and that these policies will be refined based on feedback from individuals and organisations from across the community, including the Energy Efficiency Council and its members. However the fundamentals of what has been put forward here are, in my view, very strong.

The NSW Government's NSW Climate Change Policy Framework puts in place an integrated approach to renewables and energy efficiency. The energy efficiency measures proposed in the Draft Plan are carefully calibrated to respond to the drivers and barriers in each part of the NSW economy. And of course they build on and complement the already substantial policies and programs the NSW Government has in this area, including the Energy Savings Scheme and the Government Resource Efficiency Policy.

You'll have noted by now that I'm a fan of this set of proposals. Its because they show genuine leadership, and I believe that deserves recognition.

This is the first time that any Australian Government has proposed such a ambitious, considered, and properly resourced set of measures on energy efficiency. In short, this Draft Plan is best in class, and a template for action that other governments around Australia should study closely.