Tony Arnel

Say the word “infrastructure” and it is usually highway upgrades, new ports or railways, bridges or even broadband networks that spring to mind.

And yet, there is a less visible type of infrastructure that should be a national priority: energy efficiency.

With almost 200 nations signing on to an ambitious climate pact in December – one which aims to halt global warming to well below 2 degrees Celsius – Australia will need a productive and practical strategy towards decarbonisation. And buildings must form a large part of this strategy.

A recent UK report from Frontier Economics, Energy Efficiency: An Infrastructure Priority, has found that investing in energy efficiency should be considered an investment in infrastructure. The report authors argue that energy efficiency projects provide comparable economic benefits, as well as the “public service” of reducing carbon emissions and improving health and wellbeing. The report concludes that there is a strong case for publicly funded investment in energy efficiency.

Frontier Economics emphasises the potential of domestic energy efficiency investments to reduce energy bills and household carbon emissions, free-up energy sector capacity and reduce the exposure of consumers to volatile fuel prices.

Energy efficiency investments result in more comfortable buildings, which increases health, wellbeing and labour productivity too. And because these investments involve multiple, small incremental spends, the scale and focus of an energy efficiency program can be adjusted over time as new technologies come to light.

ClimateWorks has found that we could nearly double our energy productivity in Australia by 2030 by investing in the modernisation of our energy system and embracing recent technological developments. ClimateWorks’ Australia’s Energy Productivity Potential report finds that energy costs have grown by 67 per cent over the past decade, and are now equivalent to 8.2 per cent of total GDP.

Tellingly, the report argues that, despite some progress, Australia still “lags behind other G20 countries, both developed and developing, and the lag will increase if nothing is done to accelerate improvement”.

It appears the federal government is listening. On 4 December, the COAG Energy Council released the National Energy Productivity Plan, which aims to reduce the costs of energy to both businesses and households, maintain our international competitiveness and grow the economy while reducing our national carbon footprint.

When energy is seen as a fundamental input to the economy – just like labour or capital – then we can take steps to ensure it is used productively. Industry has already identified $1.2 billion of annual net financial benefits from increasing energy productivity – which means more investment and more jobs.

A new report from Environment Victoria suggests that upgrading buildings just in that state alone would stimulate $10 billion in investment and 13,000 jobs.

The launch of the NEPP follows on from the federal government’s new target, set in August, to improve national energy productivity by 40 per cent by 2030. This equates to saving around 160 million tonnes of emissions. The National Energy Productivity Plan promises to deliver at least a quarter of the emission cuts Australia needs to meet its 2030 emissions reduction target.

The plan recognises the central role that buildings play in boosting energy efficiency, and says that energy efficiency requirements in both residential and commercial building codes are “out of date with recent technologies”.

Meanwhile, momentum is growing for nations to make large-scale commitments to energy efficiency. More than 70 international banks have made voluntary commitments to enhance energy efficiency investments under the Financial Institutions’ Statement on Energy Efficient Finance. Long-term investors have also signed onto efforts to increase investment in the sector, through the Energy Efficiency Investor Statement, which is underpinned by more than US$2.7 trillion in assets managed by the United Nations Environment Programme Finance Initiative.

Annie Degan, UNEP’s Finance Initiative coordinator, has said that our collective goal “must be to more than double the rate of energy efficiency investments globally, with private sector financial institutions re-prioritising their approaches and business models to reflect this”.

If we agree that energy efficiency is one of the most cost-effective ways of meeting climate change goals, then thinking about energy efficiency as infrastructure can help us better identify and overcome the market and policy failures that have prevented its widespread delivery.

And by placing energy efficiency on the same level as other infrastructure projects, perhaps we can change the debate about our priorities and ensure we get best bank for our infrastructure buck and create thousands of jobs along the way.

Tony Arnel is global director of sustainability at engineering consultancy Norman Disney & Young. He is also president of the Energy Efficiency Council.

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