Government freezes energy grants, putting strain on energy efficiency

Energy Action
Tuesday, 16 October, 2012

The government has been supportive of businesses wanting to improve energy efficiency and reduce emissions and has put several schemes in place. As part of these plans, in 2011 they pledged $1.2 billion in grants under the Clean Technology Investment and Innovation programs, a central part of the Clean Energy Future Plan, with $800m for the manufacturing industry through the Clean Technology Investment Program. A further $200m was set aside specifically for the Clean Technology Food and Foundries Investment Program. The remaining $200m was assigned to the Clean Technology Innovation Program. These grants have significantly reduced the cost of investing in energy efficiency for many businesses with a wide range of projects attracting grant funding (including replacing outdated equipment).

Although the Clean Technology grants have proved both effective and popular, the government has put the grants on ‘pause’ subject to a full budget review. As one of the major barriers to organisations implementing efficiency plans is cashflow, the freeze is a real blow for Australian businesses. Many may have already spent time educating themselves about energy efficiency grants or invested time completing the complex grant application process, only to be disappointed.

Despite the freeze, the temporary pause on these grants needn’t mean the end of Australian businesses’ efficiency plans. There are still ways to implement efficiencies without the need to invest heavily.

The first step is understanding the relationship between your key business drivers and your energy usage and spend. Your strategy and business cases for investment should reflect this.

Saving energy makes good sense in terms of the environment, your operating expenses and your business outputs (be they hard measures such as tonnes of product or soft measures such as customer comfort and security). However, businesses need to understand that in some cases, energy efficiency may require a level of sacrifice in exchange for lower energy costs (ie, sacrificing funds, physical square metres on site, delays in productivity while projects are being implemented, etc). In return for this sacrifice, not only can they achieve savings and reduced consumption, but often improved quality, productivity or even staff/customer experience.

There are ways to minimise the impact of these sacrifices and make becoming more energy-efficient a simpler process. For example, Energy Action works with Low Carbon Australia to provide finance solutions and advice to organisations that want to upgrade to the latest energy-efficient technologies while managing cashflow.

Another way to quickly and easily achieve energy and cost efficiencies, without the need for funding, is monitoring bills. This may sound like a basic task, but with all the jargon, technical information and complex calculations, energy bills can be confusing and difficult to understand for Australian businesses. Because of this, many discrepancies between what organisations should be paying and what they’re actually paying go undetected. Sometimes the difference may only be a few dollars, but in many cases it can be hundreds or even thousands of dollars.

Another major and well-publicised change implemented by the government in recent months is the introduction of a price on carbon. While there is a general agreement that businesses should endeavour to minimise their carbon footprint, the introduction of the ‘tax’ has caused much confusion and worry among Australian businesses. Part of this is due to the confusion surrounding the carbon pass-through process, as the Clean Energy Future policy failed to provide energy retailers with specific guidelines on how carbon should be passed through to consumers. Whilst the initiatives being introduced by the federal and state governments have significant strengths, it’s often the lack of clear guidelines incorporated into the policy for implementation and execution that is the cause of confusion for stakeholders, including energy retailers. Businesses should be seeking third-party guidance to understand how carbon costs are being passed through on in their bills and if more favourable contracts are available.

Val Duncan, Managing Director, Energy Action

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