Climate Institute chief executive John Connor

15 July 2013 — Australia’s failure to match other countries’ rates of energy efficiency improvement will cost $26 billion by 2030, a report released by the Climate Institute and GE has found.

The paper follows last year’s launch of the Industrial Internet Strategy by GE, which makes no mention of the words green or sustainable, but is strong on energy savings and the link with productivity, claiming the world’s GDP could be better off by up to US$15 trillion with a one per cent rise in energy efficiency.

See our story GE’s White Paper on the Industrial Internet: highlights

The new research, carried out by Vivid Economics and based on over 30 years of data from 28 countries, quantifies the impact of energy efficiency improvements on economic output, finding that a one per cent energy efficiency gain would boost gross domestic product by 0.1 percentage points.

“If Australia improved its energy efficiency by just an extra one per cent each year it would generate an additional $8 billion in GDP by 2020 and $26 billion by 2030,” said Climate Institute chief executive John Connor. “This is an important contribution to improving Australia’s productivity, as well as cutting our energy bills and carbon pollution.”

GE Australia & New Zealand director of Ecomagination Ben Waters said there was enormous potential to achieve productivity gains and eliminate costs from Australia’s major industries.

“This new research reaffirms that improvements in energy efficiency and economic growth are not mutually exclusive,” Mr Waters said. “By making even small investments in our energy productivity, we have the opportunity to reach new levels of efficiency, drive economic growth and improve utilisation of our scarce energy, mineral, agricultural and water resources while reducing carbon emissions.”

The savings identified for the construction and commercial buildings sector were:
  • A four per cent reduction in energy use in the construction sector, saving $15 million a year
  • A 37 per cent savings across commercial buildings categories
  • 16 million tonnes of CO2 saved by 2020 if all savings opportunities are adopted

The report said the sector faced barriers including limited availability of internal capital, short payback thresholds for investment, risk of interrupting operations or key production lines; and long decision cycles.

Australia’s annual energy efficiency improvement of around 0.5 per cent is well below the International Energy Agency average of one per cent a year, and also below comparable economies such as the United States (0.9 per cent) and Canada (1.4 per cent).

The Climate Institute said the government could act to boost energy productivity levels by 30 per cent by 2020 through:

  • Replacing inconsistent state-based energy saving schemes with a nationally consistent and robust Energy Saving Initiative covering the whole country
  • Introducing ambitious emissions/efficiency standards for vehicles similar to those of the United States and Europe
  • Increasing performance standards for equipment and products
  • Ensuring that energy pricing more accurately reflects the true costs of energy use (eg. time-of-use and critical peak electricity pricing; removal of fossil fuel subsidies; pricing pollution generated from energy)
  • Maintaining the carbon price mechanism, which encourages reduced energy use

“The reality is that our current policies are inadequate to address the barriers preventing smarter energy use,” said Connor.

“We need to get beyond the idea that energy efficiency means changing light bulbs. In fact, just about every product and process can be streamlined to reduce energy waste.

“Businesses are starting to recognise this, but there’s a lot more they can do.”

Read our stories on GE and energy efficiency:

GE, Ben Waters on the industrial strength business case for green (but not)
News from the front desk: Issue No 127

Go to The Climate Institute to read the full report.