Today I want to talk about the Gillard Government's plan for a clean energy future and the important role that energy efficiency will play.
Thank you for the invitation to speak today and congratulations on what by all accounts has been a very successful inaugural Summer Study program.
An event such as this is incredibly important to the industry, policy makers and the Australian Government as we go about building Australia's clean energy future.
Today I want to talk about the Gillard Government's plan for a clean energy future and the important role that energy efficiency will play.
The great thing about energy efficiency measures are that they can help achieve emissions abatement while reducing costs to consumers and producers.
The Government's plan
Australia has abundant resources, including fossil fuel and renewable energy supplies.
Australia's resources have contributed to strong economic growth, internationally competitive heavy industry, manufacturing and services sectors, and an enviable standard of living.
Australia enjoys low unemployment, solid economic growth, contained inflation, and very low public debt. These solid fundamentals have contributed to gross national income having risen more than 30 per cent over the past seven years, as the terms of trade have increased by over 50 per cent.
The energy sector accounts for around three quarters of Australia's total emissions. If we are to de-couple economic growth from emissions intensity we have to start here.
Using energy in the smartest and most productive way is in Australia's best interests. It makes good economic sense.
The Government's comprehensive Clean Energy Future plan will transform Australia, while maintaining the growth and prosperity that we currently enjoy.
This plan will dramatically cut pollution, reducing Australia's greenhouse emissions by at least 5 per cent compared with 2000 levels by 2020 - which will require cutting net pollution by at least 23 per cent in 2020 - and 80 per cent below 2000 levels by 2050.
In doing this we have joined other countries to take a stance on climate change globally.
More than 30 countries and a number of US states already have emissions trading schemes. Bills to introduce an emission trading scheme are currently being considered by Governments in Mexico and South Korea. And, in the past few weeks alone, we have seen announcements across the globe from countries that are considering pricing carbon, including South Africa, the Czech Republic and Dubai.
The Government's Clean Energy Future plan has four key elements.
The first is the introduction of a carbon price.
The second is strong support and investment in clean energy.
The third is creating opportunities in the land sector to cut carbon pollution, improve farm sustainability and drive regional economic opportunity.
And the fourth element of the Government's plan is smarter energy use in industry and households. This is what I want to talk about today.
A carbon price will create an incentive for business and individuals to change the way they use energy.
A carbon price will encourage companies to innovate and invest in new technologies and to use energy more efficiently. With a carbon price, being smarter about energy use becomes more attractive.
Our economy is energy intensive, and as a nation our energy efficiency has not been improving fast enough. While we've joined the international effort to reduce emissions, because Australia has long had access to comparatively cheap domestic energy, we have not had the same economic incentive as many other countries to take more action in this area.
Regardless of action on climate change, with rising energy prices caused by infrastructure investment, there is more incentive for us all to invest in smarter practices for energy efficiency.
To build on this increased incentive and market for investment, the carbon price must be partnered with complementary measures that promote efficiency.
This is, of course, more than just switching off the lights or using energy saving globes. We know that households and businesses are often unaware of the opportunities to be smarter about their energy use. We also know that households and businesses face capital constraints.
Through the Government's clean energy future investment, we are helping households and businesses become better informed. And we are creating enormous opportunity for investment in new technologies and services.
While many of the measures in the Clean Energy Future plan, like the carbon price, are targeted at industry and regulated by Government, energy efficiency is an area where all citizens can take action.
That is why we have designed a new suite of programs under the Clean Energy Future plan that will fund the trial and demonstration of smarter energy use, while also bringing together and empowering Australia's business, community and government sectors to make smarter energy decisions across the board.
These programs will support jobs and investment in Australia's services and manufacturing sectors, giving them a chance to demonstrate their smarts and commercial viability.
The programs are designed to make energy costs more manageable for households and businesses and jump-start efforts to boost energy productivity.
Community Energy Efficiency Program
While positive economic results following changes in energy use can be seen almost immediately, implementing measures that reduce energy use in larger community facilities and buildings can be a costly and time-consuming project.
To help our communities, we have established the $200 million Community Energy Efficiency Program. Through the program we will co-invest $200 million to support local councils and community organisations to improve the energy efficiency of non-residential council and community buildings, facilities and lighting.
Low Income Energy Efficiency Program
We know that for low income households, overcoming barriers to energy efficiency, including how to reduce energy use and the costs of implementing measures, can be particularly difficult. These households are also, unfortunately, the most vulnerable to rising energy prices.
Over half the money raised from the carbon price will be used to assist households and nine in 10 households will receive a combination of tax cuts and payments to help with the costs of the carbon price.
In addition through the Government's $100 million Low Income Energy Efficiency Program, we will assist low income households to overcome these barriers by finding new approaches to sustainable energy efficiency practices that will help manage energy costs and improve the health, social welfare and livelihood of these households.
Energy Efficiency Information Grants
We also know that small and medium-sized businesses and community organisations may be particularly vulnerable to the impact of energy costs but are often time-poor and hard to reach.
The Government has invested $40 million towards Energy Efficiency Information Grants. These Grants provide funding to industry associations and not-for-profit organisations to give practical energy efficiency information to small and medium-sized businesses and community organisations. This information will help them to make informed decisions about energy efficiency and implement smarter ways to use energy.
Clean technology investment
Today I've focused on the Government's Community, Low-Income Household and Information energy efficiency programs and grants. These programs are a major part of the Government's Clean Energy Future plan as they help us to identify the smartest way to use energy, particularly within those communities and businesses most vulnerable to rising energy costs.
While mitigating the impact of the carbon price through energy efficiency measures is highly important, the Government is also directly supporting investment in clean technology.
The Government announced a $1.2 billion Clean Technology Program to provide funding to support business investment in low-emissions technologies and capital equipment, which will help them to implement improved energy efficiency. This will create and enhance opportunities for existing businesses as they move to operating in a clean energy future.
At a national level, the Government continues to pursue a combination of regulatory, information and incentive-based activities to increase Australia's levels of energy efficiency.
Energy Efficiency Opportunities
The Government's highly-effective Energy Efficiency Opportunities Program continues to engage our largest energy users, including over 320 corporations which represent almost 60 per cent of Australia's total energy use. This is a sector that has the greatest potential for emissions reduction and cost savings through implementation of energy efficiency measures. And the results show.
Energy Savings Initiative
I'd now like to discuss the work that we are doing on a national Energy Savings Initiative that was announced as part of the Clean Energy Future plan.
The Energy Savings Initiative is a market-based tool that would place obligations on energy retailers to find and implement energy savings in households and businesses. The Initiative would help consumers to save money by encouraging the take-up of energy efficient technologies.
The Government has committed to undertake further work on a possible national Initiative.
A final decision on whether to adopt a national Initiative will be based on the outcome of economic modelling and a regulatory impact analysis, which will be completed by the end of 2012.
We have established a working group to investigate whether a national market-based scheme would be an appropriate and effective policy option for Australia. And we are continuing to work with stakeholders on the merits of a national Initiative.
National Strategy on Energy Efficiency
I also want to acknowledge the progress by Australian governments - federal and state and territory - made in close cooperation through the Council of Australian Governments (COAG) on energy efficiency.
In 2009, COAG agreed a 10 year National Strategy on Energy Efficiency, which contains a raft of worthwhile initiatives that we continue to advance under the recently established Select Council on Climate Change.
One of the main themes of the National Strategy on Energy Efficiency is making buildings more efficient.
Around a fifth of Australia's energy is consumed within buildings and the scope for cost effective improvements in building efficiency is enormous. The Building Energy Efficiency Disclosure Act, which has been running for more than a year now, seeks to provide reliable information on building energy efficiency to potential buyers and lessors. Over 400 commercial buildings nationwide have now obtained a Building Energy Efficiency Certificate. These certificates are providing purchasers and tenants with valuable information about potential energy operating costs of a commercial building.
Recent independent studies have shown that making public information on energy efficiency has real value for the market. A recent study showed that office buildings with a 4- to 5-star NABERS rating had lower vacancy rates and higher rentals than lower rated buildings. Overall rates of return on buildings of 4 to 5 stars were more than double those of buildings rated 3.5 stars or less, and nearly double those of unrated buildings.
Australian governments have also agreed, through the National Strategy, to investigate the mandatory disclosure of energy, water and greenhouse gas performance information in residential buildings.
Other activity is occurring in the buildings space through Low Carbon Australia - a not-for-profit company established by the Federal Government to partner with business and public sector organisations to help them unlock the commercial benefits of energy efficiency improvements.
A good example of Low Carbon Australia's work is its partnership with Wagga Wagga City Council to introduce energy efficiency technology into the council's operations. The partnership saw the installation of energy efficiency equipment in three key council facilities - Civic Centre, Civic Theatre and the airport - resulting in a saving of $60,000 per year.
We are also continuing work on nationally consistent appliance performance regulation through the Greenhouse and Energy Minimum Standards.
Australia pioneered energy performance standards and energy labels in the mid 1980s and they have helped reduce Australia's energy costs and carbon pollution for over 25 years. Over the years inconsistencies have arisen in the state-based programs that prevent them reaching their full potential. As a result, the Australian Government and all states and territories have jointly developed the new, nationally-consistent GEMS Program. New Zealand will also partner Australia under the GEMS Program, continuing the strong Trans-Tasman cooperation on energy efficiency issues.
Conclusion
Australia can use energy more efficiently.
Using energy more efficiently does not mean going without or cutting production. It means being smarter about energy use and creating opportunities for growth.
Using energy more efficiently can lower carbon pollution, improve energy security and save households and businesses money, now and into the future.
This is why improving energy efficiency is a key element of the Gillard Government's plan for a clean energy future, along with a carbon price, renewable energy and action on the land.
Under the Government's plan, businesses will be supported in finding ways of producing more goods and services with less energy.
Investment and technological development will be strengthened - Australian innovators will be rewarded at home and abroad with new opportunities.
A focus on energy use will drive jobs growth - in existing industries as productivity, competitiveness and profit grow, and in new industries as households and businesses seek advice and expertise on smarter energy use.
Ultimately, being smarter about energy use can lead to an improved standard of living for all Australians - something that we can all be part of and be proud of.
