If Australia were to improve its energy efficiency by 1 per cent, it would be able to add $26 billion to the economy by 2030.
This is a finding of research commissioned by the Climate Institute and US energy giant General Electric. According to the research, Australia’s poor investment in energy efficiency is costing the nation tens of billions of dollars in of economic growth.
This new research, the first to quantify the impact that energy efficiency can have on economic output, found that on average a 1 per cent improvement in energy efficiency boosted GDP per person by 0.1 percentage points. It was carried out by Vivid Economics and is based on analysis of over 30 years of data from 28 countries.
“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 John Connor, CEO The Climate Institute.
“This is an important contribution to improving Australia’s productivity, as well as cutting our energy bills and carbon pollution.”
There are some simple steps that Australia could take to cut energy use across the economy. For example, major industrial sectors like manufacturing, resources extraction and processing, construction, and freight and air transport could cut their energy use by 11 per cent, saving companies some $3 billion each year, according to recent research by ClimateWorks Australia.
Energy saving tactics range between sectors, but can include upgrading equipment, retrofitting buildings and refining operational processes.
According to GE Australia & New Zealand Director of ecomagination, Ben Waters, there is plenty of potential to achieve productivity gains and eliminate costs from some of Australia’s major industries, such as mining, and manufacturing.
“This new research reaffirms that improvements in energy efficiency and economic growth are not mutually exclusive,” said Waters.
“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.”
On Sunday, Prime Minister Kevin Rudd confirmed that the carbon tax would move to a floating price on carbon a year earlier than previously planned.
The news was welcomed by The Australian Industry Group welcomed the news, with CEO Innes Willox saying in a statement, “We will be looking for more detail, but in principle a switch to much lower internationally linked carbon prices next year would be very positive for businesses struggling with high energy prices and lost competitiveness.”
However, Connor said that the move to the ETS is going to have to be accompanied by increased ambition on the climate change issue, strengthened domestic policy and a continued integral role for the independent Climate Change Authority.
“Remember why we did all this in the first place: it is about reducing Australia's disproportionate contribution to climate change and making our high carbon economy competitive in the low-carbon reality of the 21st century," he said.