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ESIA Submission:
Australian Government
Independent Review of Australian Carbon
Credit Units (ACCUs)
Consultation
26 September 2022
(Extended to 3 October 2022)
Submitted to the Independent Expert Panel, supported by the Secretariat in the
Department of Climate Change, Energy, the Environment and Water, Australian
Government, via ACCUReview@dcceew.gov.au
Energy Savings Industry Association
Suite 2, Ground Floor, 109 Burwood Rd, Hawthorn 3122 www.esia.asn.au
ABN 52 166 026 766
Table of Contents
1. Introduction ............................................................................................................................ 3
2. Essential ACCU work needed: simplify & broaden energy efficiency methods ....................... 4
3. Responses to consultation guiding questions ......................................................................... 7
4. Appendix A – ERAC Media Release, 7 April 2022 .................................................................. 13
5. Appendix B – ESIA Media Release, 8 April 2022 .................................................................... 15
6. Appendix C – ESIA Bulletin article, 31 April 2022 .................................................................. 17
7. Appendix D – ESIA Recommendations for strengthening the ERF ........................................ 18
8. Appendix E – ESIA Recommendations for streamlining or improving ERF method
development processes ................................................................................................................... 19
9. Appendix F – ESIA VEET Postcode Analysis 2018 ‐ Sample.................................................... 20
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 ii
1. Introduction
The Energy Savings Industry Association (ESIA) welcomes the opportunity to provide this submission to this consultation, which commenced on 29 August 2022, to the Independent Expert
Panel, supported by the Secretariat in the Department of Climate Change, Energy, the Environment and Water, Australian Government.
The ESIA has referred to https://consult.industry.gov.au/independent‐review‐of‐accu which states:
‘The Review Panel is seeking your views on the integrity of ACCUs, and the broader impacts of activities incentives under the ACCU scheme framework. The purpose of the Review is to ensure that ACCUs and Australia’s carbon crediting framework are strong and credible and will be supported by participants, purchasers and the broader community. The Review will help ensure the integrity of the system in contributing to Australia’s emissions reduction targets, strengthen the carbon market and support reforms to industrial facilities covered by the Safeguard Mechanism.
The Review will consider how well the system contributes to regional economics and the broader community; and whether the right processes are in place to avoid adverse impacts.’
The ESIA has also referred to the following documents provided:
https://storage.googleapis.com/converlens‐au‐
industry/industry/p/prj2159b971dbf16109958b4/public_assets/ACCU‐Review‐
Consultation‐paper.pdf
This submission can be made public.
About ESIA
The Energy Savings Industry Association (ESIA) is the peak national, independent association representing and self‐regulating businesses that are accredited to create and trade in energy efficiency certificates in market‐based energy savings schemes in Australia. These activities underpin the energy savings schemes which facilitate the installation of energy efficient products and services to households and businesses. Members represent most of the energy efficiency certificate creation market in Australia. Schemes are established in Vic, NSW, SA and ACT. Members also include product and service suppliers to accredited providers under the schemes. As well, the ESIA represents member interests in national and state initiatives that include energy efficiency and demand reduction, such as the Federal Government’s Carbon Farming Initiative energy efficiency methods and the NSW Peak Demand Reduction Scheme.
Further engagement
We welcome the opportunity to discuss this submission further, please contact the ESIA Executive
Officer at comns@esia.asn.au.
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 3
2. Essential ACCU work needed: simplify & broaden
energy efficiency methods
Theory is sound
In theory, energy savings will be supported by a carbon signal across Australia due to the federal government’s:
proposed reforms to its Safeguard Mechanism ‐ currently under consultation and for
which a formal response is yet to be published; and
ACCU Integrity Review – this consultation.
(Without a National Energy Savings Scheme (NESS) – which has been recommended by the Climate
Change Authority (CCA) for years, the combination of the Safeguard Mechanism Reforms and ACCU
Integrity Review hold the key to unlocking energy saving, emissions reducing energy efficiency upgrades now.)
Practice needs work
But, in practice – based on current experience and drawn from Australian Carbon Credit Unit
(ACCU) creation statistics, there will likely be negligible energy efficiency project uptake unless energy efficiency methods are significantly simplified and broadened.
However, unlocking this opportunity is straightforward. Proven and effective energy efficiency methods could be immediately adopted from the successful energy savings schemes, particularly from the two largest: the NSW Energy Savings Scheme (ESS) and the Victorian Energy Upgrades
(VEU) program. The ESS may be easier to emulate and has a nimbler legislative framework.
ACCUs waiting at go‐slow orange light for many energy customers
Table 1 below provides a snapshot of the existing carbon signals for energy efficiency upgrades in jurisdictions across Australia. The table shows upgrade types that are eligible including electricity or gas, and for which types of energy customers including residential, commercial, small industry and large industrial, the latter including Emissions Intensive Trade Exposed (EITEs) entities. Most notably, ACCUs access is coloured orange because it is currently not available to all energy customers or not commercially attractive for rollout of energy efficiency upgrades. Table 1 also shows the proposed Safeguard Mechanism Credits (SMCs) which will only be available for large industrial and EITEs entities as the federal Safeguard only covers gas for liable entities that produce
Scope 1 emissions.
Table 1 – Where across Australia energy savings activities are able respond to a carbon price signal
Residential Commercial Small industrial Large Industrial/EITE
Electricity Gas Electricity Gas Electricity Gas Electricity Gas
Current
NSW (ESS) ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Vic (VEU) ✓ ✓ ✓ ✓
For SA (REPS) ✓ ✓ ✓ ✓
ACT (EEIS) ✓ ✓ ✓ ✓
ACCUs ‐ ‐ ‐ ‐ ✓ ✓ ✓ ✓
Proposed (all jurisdictions)
Safeguard Mechanism ✓
Credits (SMCs)
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 4
Table 2 illustrates the very small portion of energy efficiency projects, only three percent ‐ totaling almost 500,000 ACCUs, that were issued in the 2021‐22 financial year as part of a total of 16.5.
million ACCUs issued for the period.
Table 2 – 3% of ACCUs issued in 2021‐22 financial year were energy efficiency projects
ACCUs issued % Portion
Vegetation 9,563,840 57.9
Waste 4,089,852 24.8
Savanna Burning 1,768,712 10.7
Energy Efficiency 497,371 3.0
Agriculture 310,775 1.9
Industrial Fugitives 240,758 1.5
Transport 37,219 0.2
Facilities ‐ 0
Carbon Capture ‐ 0
Grand Total 16,508,527 100
Table 3 lists the energy efficiency projects (for which three percent of ACCUs were issued) in the
2021‐22 financial year by method, including the project provider, project name and number of
ACCUs by project. Significantly:
the first method listed: Commercial and Public Lighting Methodology was revoked
without proper consultation in 2021 and represented approximately 10 percent of energy
efficiency projects for 2021‐22. (Refer to Appendices A, B&C); and
the second method listed: Industrial Electricity and Fuel Efficiency (IEFE) Methodology has
been superseded by the Industrial Commercial Emissions Reduction (ICER) Methodology.
Table 3 – Energy efficiency projects by method, name and ACCU volume 2021‐22
Method / Project Provider Project name ACCUs
issued
Commercial and Public
Lighting
National Carbon Bank of National Carbon Bank Lighting Projects 2016 16,682
Australia Pty Ltd
National Carbon Bank of Australia Commercial and 1,170
Public Lighting
Northmore Gordon Smart Lighting Upgrade Project 15,545
Environmental Pty Ltd
Wesfarmers Ltd Wesfarmers LED Lighting Project 16,424
Sub‐total 50,021
Industrial Electricity and Fuel
Efficiency
Adelaide Brighton Cement Ltd Birkenhead additional wood firing project 24,786
Beovista Trading Pty Ltd Beoefficiency Electricity Regulation 3,138
Corporate Carbon Solutions Industrial Bardon Emissions Reduction 80,465
Pty Ltd
Gold Fields Australia Pty Ltd Granny Smith Gas Power Station 13,157
Norske Skog Paper Mills Norske Skog Boyer Mill Heat Recovery Project 19,743
(Australia ) Ltd
RTA Gover Pty Ltd Gove Alternate Power Generation Project 143,940
Santos Ltd Devil Creek Gas Plant Power Optimisation Project 13,879
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 5
Wespine industries Pty Ltd Continuous Dry Kiln Upgrade – Dardarup Mill 10,492
Woolworths Group Ltd Project Enlighten 137,750
Sub‐total 447,350
Grant Total 497,371
The three tables above illustrate and amplify the inequitable access that energy consumers currently have – and will practically have – to mechanisms to save energy and reduce greenhouse gas emissions.
For example, in Queensland, Western Australia, the Northern Territory and Tasmania large industrial energy users can access and be rewarded for taking action under the CFI, but residential and commercial customers cannot. Not only is this inequitable, but economically inefficient.
Ironically, the only methodology that commercial customers could and did access under the CFI is the one that was revoked in 2022 without genuine consultation: Commercial and Public Lighting.
And such upgrades are far from business as usual across much of Australia. (The ESIA is advocating for a reversal of the revocation as soon as possible.)
Summary ‐ energy efficiency methods need a green light across Australia
In summary, the proposed changes to ACCUs included in the ACCUs integrity consultation paper are largely supported by the ESIA. However, if we consider current learnings, experience and ACCU creation to date, then without simplifying and broadening the energy efficiency methods available, there will continue to be very limited opportunity for energy efficiency upgrades under the Carbon
Farming Initiative (CFI). This would be a poor outcome for energy consumers across Australia and especially for those jurisdictions that don’t have any mechanism that provides recognition for carbon reduction.
As a country, we finally find ourselves in a position where with careful consideration of dovetailed improvements now to the CFI and the federal Safeguard Mechanism, energy consumers across
Australia could equitably access support and so contribute to delivering smarter energy solutions that save energy and reduce greenhouse gas emissions. The federal government needs to simplify and broaden energy efficiency methods under the CFI as soon as possible. It is strongly recommended that alignment with the NSW ESS be considered as a priority.
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 6
3. Responses to consultation guiding questions
Your experience of the ERF scheme
1. Are you able to get sufficient information about the scheme, its purpose and
application?
Yes.
2. What is the result of your participation in the scheme? What has worked well? What
has not worked well?
ESIA members indicate that:
a. Energy efficiency methods have not worked well as the processes are
cumbersome, overly time‐consuming and lack relevant methodologies in
comparison to state‐based schemes. This has meant the benefits have not
warranted the efforts for eligible energy consumers and their service providers.
b. Transaction costs are high.
c. There has been a major governance failure.
During 2022, the revocation of the ERF method commercial and public lighting
was deeply alarming for industry:
– No consultation. No industry engagement. No transition period.
– While the information published on the Clean Energy Regulator website
implied due process had been followed, ESIA members with projects
were not at any time contacted during the ‘public consultation’ process,
nor were they notified of the 7 April 2022 revocation.
(Refer to Appendix A – CER website, ERAC Media Release: Commercial
and Public Lighting Emissions Reduction Fund Method revoked, 7 April
2022)
(Refer to Appendix B – ESIA Media Release: Taylor revokes ERF
commercial and public lighting method: non consultation, no transition
period, 8 April 2022)
(Refer to Appendix C – ESIA Bulletin article: Taylor revokes ERF
commercial & public lighting methods: no consultation, not transition
period, 31 April 2022.)
3. How have you or your community benefited from the scheme? In what ways?
Very few ESIA members have seriously considered or chosen to participate in the ERF
scheme. However, However, a number of ESIA members would like to mobilise more
energy efficiency projects across Australia via an effective framework if the
methodologies become available and the compliance framework is fit‐for‐purpose.
4. Has the scheme been detrimental to you or your community? In what ways?
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 7
The 2022 Commercial and Public Lighting ERF Method revocation situation left some
ESIA members who were engaging in this method highly exposed: with projects in
train, sunk investment wasted and with highly dissatisfied clients deeply concerned
that the Federal Government could act in this covert and unsubstantiated manner.
5. Have you chosen not to participate in the scheme? Why?
A lack of workable energy efficiency methods and high transaction costs have limited
engagement to date. The noted revocation has done little to instigate confidence in
the program at a time when significant data exists to refute the ERAC claim for
revocation justification. The change of government since the election has provided
encouragement for a shift in opportunities including overturning this highly
unreasonable and unsubstantiated revocation. Without this proposed outcome, there
will be continued hesitancy to participate.
6. What adverse or unintended consequences have resulted from carbon abatement
projects? What examples or evidence are you aware of?
Not applicable.
7. How might negative impacts of carbon abatement projects be avoided or reduced?
Not applicable.
Governance of the ERF
Information about the governance of the scheme is at Attachment B.
8. Are governance arrangements for the scheme sound and appropriate?
No. Note Q5 response.
The Emissions Reduction Assurance Committee (ERAC) should be held fully
accountable for the highly inappropriate manner in which the revocation occurred on
7 April 2022 just prior to the 2022 Federal election. Without this proposed action,
there will be continued concern as to the independence and integrity of the
Committee.
9. Do they provide confidence to stakeholders, including project proponents, investors,
purchasers, and communities? How could governance be improved?
No. Note Q5&8 responses.
10. What are your views about the roles and responsibilities of the Department, the Clean
Energy Regulator, the Emissions Reduction Assurance Committee and the Climate
Change Authority? Could the roles and responsibilities be refined to improve scheme
integrity?
a. The CER, ERAC and CCA must be able to function independently of the
Department and the Minister.
b. It is essential that public consultation is meaningful and effective, and
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 8
reasonable transition periods are provided when change are made. The
approach that the NSW and Victorian governments are undertaking should be
the model: tried, tested and adjusted regularly to enhance the approach.
c. ERAC integrity must be demonstrated as discussed in above responses with
the revocation reversed.
(Refer to Appendices A, B and C)
11. Is the legislative framework for the scheme fit‐for‐purpose? How might it be
improved?
It is crucial that the role of voluntary action be made additional and transparent.
12. What are your views on the Offsets Integrity Standards?
Note responses to previous questions.
Rigour and integrity of ERF methods and projects
13. Is there a sufficiently robust process for determining ACCUs and their allocation?
What aspects should be maintained? What should be improved?
Make better use of the methods in the state‐based energy savings schemes including
the Victorian Energy Upgrades program and the New South Wales Energy Savings
Scheme. These are proven and robust since 2009.
14. Could improvements be made to the transparency of:
• information used to support method development and review? How?
• crediting of ACCUs? How?
• decision making? How?
Increase transparency of how abatement has been delivered, this is especially
significant where property right arise.
There must be a level of transparency balanced with commercial sensitivities.
15. There are a lot of technical rules and requirements for participants in the scheme.
• Are these requirements sufficiently robust to have confidence in the integrity of
carbon abatement?
• Do these processes create excessive or avoidable barriers to participation?
• How might processes be changed to better fulfil the objectives of the scheme?
To date, little opportunity has been provided to support energy efficiency upgrades.
Note response to Q13.
16. Could improvements be made to existing approaches:
• for project reporting, auditing, monitoring, compliance, or enforcement?
• for developing, approving, and reviewing methods?
Streamline the certification creation process so it is not cumbersome and attracts
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 9
lower transaction costs.
Co‐benefits and other impacts
17. The ERF framework is designed to deliver lowest‐cost abatement. However, in
addition to carbon abatement, many projects deliver environmental, economic, social
and cultural benefits – often referred to as co‐benefits. Projects generating ACCUs
with co‐benefits can offer additional value to suppliers, purchasers and communities.
• What is your experience with co‐benefits from carbon abatement projects?
• What are the opportunities to increase co‐benefits from carbon abatement
projects?
• How should co‐benefits be recognised and measured?
Not applicable.
18. It is possible that ACCU projects may have negative impacts, including projects that
provide cobenefits.
• What is your experience in relation to projects that have had negative impacts?
• Do you consider these negative impacts outweigh the abatement and potential co‐
benefits of these projects?
• Are current arrangements to manage potential adverse impacts reasonable and
appropriate? How might these arrangements be improved?
Not applicable.
Relationship to voluntary Climate Active certification
19. At present, all Climate Active carbon neutral certifications will be required to use a
minimum of 20% ACCUs from 1 July 2023 for new and ongoing certifications equal to
or greater than 1,000 t CO2‐e and from 1 July 2024 for certifications less than 1,000 t
CO2‐e.
• What are your views on this requirement?
• Do the merits of this requirement outweigh any costs or disadvantages?
• Are there any issues with market access to ACCUs?
• Is there an alternative?
A move should be made to achieved 100% of the abatement from projects undertaken
in Australia to ensure transformation occurs locally. (The only exception in the first
instance could be to support the Indo‐Pacific Carbon Offsets Scheme as a minor
portion.)
All Voluntary Action should be additional.
Future
20. Australia has committed to achieving net zero emissions by 2050. Many stakeholders
and experts consider that there will be increasing demand for ACCUs and other carbon
credits over time.
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 10
• Is the current carbon crediting framework, including the offsets integrity standards,
adequate and suitable for future needs and opportunities?
• What changes could be made to improve the scheme so that it provides appropriate
abatement and other benefits into the future?
• What arrangements or changes might be implemented now to help ensure that the
scheme remains appropriate and fit for purpose over the decades ahead?
a. Energy efficiency methods need to be a major component, which is not
currently the case.
b. Improving both the federal Energy Security Safeguard and the current carbon
crediting framework including ACCUs in a timely manner could rapidly deliver
energy efficiency transformation in households, SMEs and large commercial
and industrial sites across Australia. No other mechanism currently exists that
could achieve this now. Even the concept supported by the Climate Change
Authority for years to introduce a National Energy Savings Scheme, strongly
supported by the ESIA, will likely take longer that adjusting the current
framework overhaul opportunity. If next steps are well designed with
consideration of the NESS and National Peak Demand Reduction Scheme
(PDRS) (the latter of which will be launched in NSW later in 2022 with
learnings imminent). It is reasonable to envision that:
Australian mums and dads and businesses will pay lower energy bills with
financial support to install more energy efficient lighting, air conditioning,
hot water and weather sealing. Australians will have more comfortable
and better functioning homes and businesses. These programs will
transform infrastructure and energy consumption and reduce greenhouse
gas emissions to reach net zero climate targets.
c. Methodology Improvements that could be made:
i. Include new methods that specifically cover the residential and
commercial sector activities that have been successful in jurisdictions
with energy savings schemes (including lighting, air conditioning, hot
water heat pumps and weather sealing)
ii. These methods should be deemed (as currently applies to some
methods under the ERF) and enable forward creation to address
transaction costs and other barriers to the uptake of energy efficiency.
iii. Extend the crediting period for energy savings activities from seven to
ten years, in line with approaches adopted under existing state
schemes and comparable with the 12 years provided to landfill gas
projects under the CFI.
iv. Improve the administrative and compliance arrangements under the
ERF which are currently cumbersome, create delays and unnecessarily
add to transaction costs.
This will:
o provide greater and more equitable access across the nation and economy,
enabling energy consumers in Qld, WA, NT and Tasmania to access energy savings
activities and reduce their energy bills.
o deepen and strengthen the ACCU market.
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 11
The ESIA has periodically published other ERF improvements via public consultations
including to the King Review (2019) and the Climate Change Authority (2017)
(Refer to Appendix D – ESIA Recommendations for strengthening the ERF)
(Refer to Appendix E ‐ ESIA recommendations for streamlining or improving
ERF method development processes)
d. Granular accountability is important, with VEU the flagship to emulate. Refer
to the 2018 ESIA VEU Postcode Analysis 2018 (available upon request) made
possible due to the transparency of energy upgrade types and locations
available publicly on the VEU Registry published by the regulator of that
scheme, the Victorian Essential Services Commission. Such published data can
reveal highly localised benefits and accountability of that scheme, as well as
usual information for businesses conducting upgrades, especially when
overlaid with Australian Bureau of Statistics Census data.
(Refer to Appendix F – ESIA VEET Postcode Analysis 2018 – Sample)
e. How the Safeguard could be complemented by a NESS and improved ERF –
aka ACCU review.
The ESIA continues to advocate for dovetailing of policy mechanisms and
programs federally and as possible with state jurisdictions. It is important in
this review to consider how improvement to the ERF and ACCUs opportunities
will complement, into the future, changes being considered in a separate –
just closed – consultation on the Safeguard, as well as a possible NESS and
existing energy savings schemes in Victoria, NSW, SA and the ACT.
(Refer to Appendix F – How the Safeguard could be complemented by a NESS
and improved ERF)
f. Tipping point – ACCUs and Safeguard reviews in 2022
This federal ACCU review is a tipping point, along with the Safeguard review,
for Australia to deliver significantly overhauled and workable mechanisms that
will enable rapid emissions reductions as a priority to address climate change
and energy market challenges. The federal government’s response must
strongly support transformation of households and businesses across the
nation by enabling energy customers to directly participate and access
financial incentives that will save them energy and money. ASAP.
____________
For more information regarding this submission, please email ESIA Executive Officer, comns@esia.asn.au
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 12
4. Appendix A – ERAC Media Release, 7 April 2022
ERAC Media Release, 7 April 2022 https://www.cleanenergyregulator.gov.au/ERAC/Pages/News%20and%20updates/
NewsItem.aspx?ListId=19b4efbb‐6f5d‐4637‐94c4‐121c1f96fcfe&ItemId=1094
The Minister for Industry, Energy and Emissions Reduction has revoked the commercial and public lighting method under the Emissions Reduction Fund (ERF) following a review by the
Emissions Reduction Assurance Committee (ERAC).
The commercial and public lighting method allowed proponents to generate Australian carbon credits units (ACCUs) by upgrading, modifying, replacing, or supplementing a lighting system in a commercial area, road, or public space to increase energy efficiency, reducing emissions through reduced electricity use.
Following a crediting period extension (CPE) review, the ERAC advised the method may no longer comply with the offsets integrity standard of additionality given the falling cost of more efficient lighting systems has increasingly made such upgrades a business as usual occurrence.
ERAC Chair David Byers said ERAC’s recommendation represented an example of the robust integrity arrangements underpinning the ERF Scheme.
“ERF methods are subject to legislated and rigorous scrutiny so that the public and industry can have full confidence in their effectiveness.
“Overseen by the ERAC, all methods undergo regular and comprehensive reviews to ensure they remain fit for purpose and complying with our high standards of integrity, including our strict additionality requirement.
“As is standard practice for the ERAC, this decision follows a period of evaluation including public consultation, and a review of the best possible available data and information.
Mr Byers said that the change reflected ERAC’s analysis of substantial changes in the lighting sector.
“Since the method was first announced, ERAC have identified a number of regulatory, technological and market variations impacting the sector that have informed this recommendation.
“This decision comes into effect from today (7 April 2022) and means that no new projects are able to register under this method.
For more information see commercial and public lighting on the Department of Industry,
Science, Energy and Resources’ Consultation Hub.
Background
In June 2015, ERAC found that the Carbon Credits (Commercial and Public Lighting)
Methodology Determination 2015 (the Lighting method) met the offsets integrity
standards and was suitable to be made, with the Minister accepting the
recommendation.
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 13
As mandated by legislation, ERAC undertakes crediting period extension (CPE) reviews
of methods prior to when the first project registered under the method starts the last
12 months of its crediting period.
ERAC commenced its CPE review into the lighting method in July 2021. Through a
consideration of data and third‐party submissions, the ERAC found there have
been technological, regulatory and market changes.
These changes mean that it is increasingly likely that Lighting method activities will
occur in the ordinary course of events.
Based on the review findings, the ERAC recommended the crediting period for the
Lighting method not be extended.
A final recommendation to this effect was made to the Minister. In addition, ERAC
worked with CER and the Department to advise the Minister that the method should be
revoked.
As provided by the Act, the eight currently registered projects will continue for the
remainder of their 7‐year crediting period. New projects cannot be registered under the
method.
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 14
5. Appendix B – ESIA Media Release, 8 April 2022
ESIA Media Release, 8 April 2022
No consultation and no transition period as Taylor revokes ERF commercial and public lighting method
Poor public policy practice has left leading energy efficient lighting and environmental certificate creation businesses in the dark. The federal government has not provided a transition period as part of their announcement yesterday that commercial and public lighting upgrades would no longer be eligible for Australian Carbon Credit Units under the Emissions Reduction Fund.
Businesses were not made aware of a consultation held from 14 January to 11 February 2022, first gaining knowledge of the consultation and revocation yesterday by chance yesterday when perusing the CER website. No submissions and no decision paper have been published.
“No consultation. No industry engagement. No transition period. How can we be confident that the assessment framework used was reasonable and fair when there has been no transparency?” said president of the Energy Savings Industry Association, Rod Woolley.
“The case remains strong to provide incentives for energy efficient lighting retrofit upgrades.
They are not business as usual (BAU). We need only look to those states where there are no energy savings schemes to see that large retrofits at scale are not happening. To reduce emissions at scale, financial incentives are still required.”
Well established energy savings schemes in NSW and Victoria slowed their wind down of lighting incentives when they heard through public consultation the range of reasons why they should hasten more slowly. For example, often data regarding the lighting market is not representative of the retrofit market. Rather, it focusses more efficient new build lighting which is becoming business as usual. Industry engagement would have provided deeper clarity on this.
“We would like to see the ‘best possible available data and information’ that the Emissions
Reduction Assurance Committee has used to come to their decision, including why no transition period has been provided,” said Mr Woolley. “This is another major opportunity lost to move
Australia forward. Yet another door has been jammed to pursue greater emissions reduction ambition with proven methods.”
Continuing delays on mandatory disclosure standards for commercial and residential properties for sale and rental is not helping the retrofit market transition to energy efficient lighting as
BAU.
Relying on the Minamata Convention ratification on 7 December 2021 is no guarantee that the federal government will mandate the transition to LEDs from mercury vapour lamps. Whereas the revoked activity was an effective mechanism to achieve appropriate disposal.
… Ends Media contact: Jessica Lynch, M 0417 539 377, comns@esia.asn.au
References (PTO)
References
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 15
ERAC Media Release on CER website
http://www.cleanenergyregulator.gov.au/About/Pages/News%20and%20updates
/NewsItem.aspx?ListId=19b4efbb‐6f5d‐4637‐94c4‐121c1f96fcfe&ItemId=1094
Consultation page
http://www.cleanenergyregulator.gov.au/ERF/Choosing‐a‐project‐
type/Opportunities‐for‐industry/energy‐efficiency‐methods/commercial‐and‐
public‐lighting
Discussion Paper
https://consult.industry.gov.au/commercial‐and‐public‐lighting‐revocation
Legislation
https://www.legislation.gov.au/Details/F2022L00547
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 16
6. Appendix C – ESIA Bulletin article, 31 April 2022
National Taylor revoked ERF commercial and public lighting method: no consultation, no transition period – poor practice
The 7 April federal government announcement to revoke the commercial and public lighting from the ERF, without genuine consultation or a transition period, reflects very poor public policy practice. This decision has left leading energy efficient lighting and environmental certificate creation businesses in the dark. ESIA media release
No ESIA members who have been or are currently engaged in such projects were contacted regarding commencement of a consultation of the method for potential revocation (which opened
13 January 2021 and closed 11 February), or subsequently regarding announcement of the revocation.
Some members have projects in the pipeline under this method and these projects will not proceed without ERF support. Barriers remain including upfront capital costs. The revoked method addressed this, whereas the remaining M&V method delays incentives, making that method fair less attractive.
The ESIA is seeking greater integrity in consultation, especially as the CER is likely to further consider lighting under the ERF under other methods including M&V. Consultation needs to engage industry participating in methods being reviewed.
Additionality assumptions made by the Emissions Reduction Assurance Committee (ERAC) – part of the CER - documented in an ERAC letter to the federal Energy Minister dated 16 March are not supported by the ESIA. That letter states that two submissions were received. A number of days subsequent to the revocation, those submissions were posted: from the Lighting Council of
Australia dated 14 April 2022 – which supported the revocation, and the other from energy expert Alan Pears AM dated 21 January – which did not support the revocation.
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 17
7. Appendix D – ESIA Recommendations for
strengthening the ERF
General points for consideration to improve the ERF for energy efficiency
projects uptake
(This information is a direct copy from ESIA submission to the Expert Panel: Examining
opportunities for further abatement Discussion Paper, Oct 2019, pp2‐3. A Targeted
Consultation for Department of Environment and Energy Commonwealth of Australia,
except the original first two points have been removed)
Energy efficiency has been a big loser under the ERF to date.
To turn this around, opportunities to incentivise further action to reduce
greenhouse gas emissions include:
i. Allow for forward creation for Measurement and Verification (M&V)
and other deemed methods.
ii. Allow for aggregated projects under all the existing energy efficiency
CFI methods with setup, audit and compliance etc on the aggregated
project, rather than a single project. This will get transaction costs
down and make individual projects more viable.
iii. Address a continuing issue with M&V‐style projects: funding comes
well after the project is completed and it is difficult to consider
financing the project. Notably, the NSW ESS Administrator has
effectively now mandated that any projects that include a seasonal
aspect must have M&V for 12 months and then the following 12
months. It would be better if shorter periods were allowed, but with
reduced forward creation.
iv. Introduce effective deemed methods (eg 10 years). In contrast,
current non‐deemed methods under the ERF and the VEU and ESS are
gaining little traction due to project complexities and regulatory and
compliance barriers. With these issues continuing, project delivery
and certificate creation are proving to be slow and financially
challenging for upgrade customers, project managers and certificate
creators.
v. Streamline existing method development processes and provide
stakeholders with greater visibility and input into methods
development. ESIA members are experienced, and have invested
heavily in these processes under the ERF, VEU and ESS.
vi. Consider further best practice ERF administration opportunities.
vii. Consider an audit regime based on risk (not set time frames eg three
in seven years). (*)
viii. Consider including activities for fuel switching, biomass and waste‐to‐
energy.
(*) Note at 26/9/22: The ERF audit regime was designed for land‐
based projects and does not suit energy efficiency projects.
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 18
8. Appendix E – ESIA Recommendations for
streamlining or improving ERF method
development processes
(This information is a direct copy from ESIA submission to the Climate Change, 23 August
2019, Appendix 1, except for section b) which has been removed as it is longer applicable)
…
As published in our submission to the Review of Climate Change policies discussion paper
5 May 2017: the ESIA is advocating for the Commonwealth Government to immediately:
adjust the Emissions Reduction Fund (ERF) to stimulate uptake of energy efficiency
projects as a transition measure to a national energy efficiency scheme and to help
businesses manage current spiralling energy prices.
Adjustments must include changes to the current Emissions Reduction Fund (ERF)
architecture.
Broadly, changes must consider the following:
i. complement the current market‐based energy efficiency schemes;
ii. make access easier to facilitate greater uptake of energy efficiency projects;
iii. ensure that these projects are treated on a level playing field with other project
types as there has been little support to date;
iv. significantly tighten baselines as they are currently fairly weak; and
v. improve and expand methodologies to make them more relevant for energy
efficiency upgrades.
Specifically, changes must consider the following:
a) adjust the crediting process for Energy Efficiency Australian Carbon Credit Units (ACCUs)
i. harmonise the Commercial and Public Lighting (CPL) method default operating
hours, deeming of 10 years upfront, lighting approval requirements, multipliers and
general compliance evidence with the New South Wales Energy Savings Scheme
(ESS), if not the entire commercial lighting method; and
ii. introduce the concept of ‘forward creation’ to the Industrial Electricity and Fuel
Efficiency (IEFE) (*) method, similar to how it is used in the ESS Project Impact
Assessment and Verification (PIAM&V) method and proposed Victorian Energy
Efficiency Target (VEET) Project‐based Assessment (PBA) to improve project
viability.
Note at 26/9/22: IEFE is now referred to as ICER.
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 19
9. Appendix F – ESIA VEET Postcode Analysis 2018 ‐
Sample
Excerpt: Bendigo East, Northern Victoria, sorted by Victorian electorate: Lower House
Note: ESIA was previously named EECCA
ESIA Submission: Australian Government Independent Review of ACCUs Consultation – 26 Sept 2022 20
