4 December 2015: The National Energy Productivity Plan (NEPP) has been released by the Council of Australian Governments (COAG) Energy Council. Through the Plan, the Australian Government has set a National Energy Productivity Target to improve Australia’s energy productivity by 40% by 2030. The Plan presents a wide range of opportunities into a coordinated strategy.

Consumers could be getting a lot more value from the money they spend on energy if Australia’s energy productivity was on par with other comparable countries such as Japan, Germany and the United Kingdom. To reverse this, the Government has set a National Energy Productivity Target to improve Australia’s energy productivity by 40 per cent between now and 2030. To achieve this target the COAG Energy Council has
developed the National Energy Productivity Plan, bringing together a wide range of opportunities into a coordinated, national plan.

In better coordinating energy efficiency, energy market reform and climate policy, it brings together new and existing measures from across the COAG Energy Council’s work program, as well as from the Commonwealth and industry.

The National Energy Productivity Plan aims to improve energy productivity by driving:

• more productive consumer choices, through measures which make consumer energy choices easier, help business compete and provide more efficient incentives; and
• more productive energy services, through measures which support innovation, competitive modern markets and consumer protection.

The Plan covers the first steps in the 15 year life of the National Energy Productivity Plan and will be continuously updated.

By improving Australia’s energy productivity, we can:

• boost Australia’s competitiveness – industry has already identified $1.2 billion of annual net financial benefits from increasing energy productivity. These benefits mean more investment and job creation.
• help consumers manage their energy costs – rapid advances in technology have provided more consumer choice, such as solar power, innovative appliances and smart meters. However, this has also increased the complexity of energy decisions. Making choices easier through better decision-making tools and providing targeted information will help consumers make the best possible decisions to manage energy costs.
• reduce Australia’s greenhouse gas emissions – the National Energy Productivity Plan is expected to contribute more than a quarter of the savings required to meeting Australia’s 2030 emissions reduction target, estimated at around 160 million tonnes of emissions.

Through the National Energy Productivity Plan, the COAG Energy Council will prioritise improving consumer information and decision making tools, the removal of market barriers to new technologies and services, and supporting wider innovation and competition within industry and energy markets. This will support more productive consumer choice from a range of better energy services.

By working together, COAG Energy Council members can achieve more than they would separately.

The initial National Energy Productivity Plan sets in train the first steps in a 15 year journey to unlock Australia’s full energy productivity potential.

It is hoped that this will see Australian consumers, businesses, and the environment all better off.

Download the Plan here.

The marginal abatement cost curve for the Plan is as follows.

An extract from the summary Plan follows.

Summary of the National Energy Productivity Plan Measures.

NB – The full Council agreement is provided in a separate Work Plan.

Efficient incentives

1. Transition to cost-reflective pricing

Ongoing network tariff reform is needed to support better price signals for network investment, to provide greater options for consumers to manage their energy usage and to facilitate the integration of new technologies. Network businesses are engaging with customers to commence the implementation of more cost reflective tariffs in 2017. Progress on price signalling to customers will be continually monitored. This work is supported by Measure 3: Make choice easier to ensure reform is introduced in a way that supports consumers to make decisions that are best suited to their needs, including a range of supporting tools and targeted communication. Status: Ongoing. Owner: COAG Energy Council

2. Market mechanisms to capture societal benefits (Emissions Reduction Fund (ERF), state energy efficiency (EE) schemes, Renewable Energy Target (RET))

The market price of energy does not include the social and environmental costs (externalities) of energy use. This results in under-investment in energy efficiency and carbon reducing activities in terms of efficient societal benefits. A range of market schemes are targeted at driving this investment, including ERF, RET and several jurisdictional EE schemes. Work will be considered to align activities and reduce red tape where appropriate, while ensuring that schemes continue to deliver the high quality outcomes that consumers expect. Status: Ongoing/expansion. Owner: Jurisdictions

Empowering consumers

3. Make choice easier.

The current market transition with increasing choice in energy services, tariffs and technologies can provide strong consumer benefits. However, this greater choice also increases complexity and could increase risks of bill shock for some consumers. Choice needs to be supported by the right tools and customer information to avoid adverse impacts. A review will be undertaken of the total energy consumer journey, working with Energy Consumers Australia. This will include considering whether there are any barriers to market provision and innovation in tools and services, and review of tools and information provided by government. The first stage of this review will be completed by the end of 2016. Status: New. Owner: COAG Energy Council

4. Support best practice services for vulnerable consumers

Vulnerable consumers (indigenous, low income earners, remote, elderly) need additional assistance beyond those in Measure 3. Based on recent research, a best practice voluntary guideline for service providers will be developed with Energy Consumers Australia and stakeholders, which will seek to reduce the barriers to vulnerable consumers effectively engaging with energy productivity measures and services. This work will report back by the end of 2016. Status: New. Owner: Commonwealth

5. Improve residential building energy ratings and disclosure

Many homeowners and tenants are choosing homes to buy or rent or are renovating their homes without adequate information about their expected energy performance, comfort and likely future energy costs. Work will be undertaken by the end of 2016 to consider a range of different tools to improve information for residential buildings, including options for implementing a national approach to residential building energy ratings and disclosure. Status: New. Owner: COAG Energy Council

Helping business compete

6. Help business self-manage energy costs

Energy productivity improvements in the small and medium sized business sector are particularly difficult where options need to be highly tailored and businesses are time-poor. The Commonwealth will consult with business during early 2016 to develop options to provide further tailored information, support networks and skilled service providers in partnership with relevant business associations. Status: New. Owner: Commonwealth

7. Recognise business leadership and support voluntary action in business

Business-led voluntary action can boost economic productivity, national competitiveness and employment opportunities. Government will work cooperatively with the business community on options to support energy productivity improvements. Status: New. Owner: Commonwealth

8. Research business benchmarks and success factors

Build a new research base that will support companies in how energy productivity can drive financial performance and competitiveness in their business, including through consideration of appropriate benchmarking. The first stage of this work will be released in late 2016. Status: New. Owner: Commonwealth

9. Expand commercial building ratings and disclosure

The review of the Commercial Building Disclosure scheme has identified benefits of mandatory disclosure for both tenants and building owners. The Commonwealth intends to respond to this review early in 2016. There are also benefits to building energy performance through the wider use of ratings schemes such as the National Australian Built Environment Rating System (NABERS). A plan for future development of NABERS rating schemes will be prepared for Council consideration in 2016. Status: Expansion. Owner: Commonwealth/ COAG Energy Council

10. Improve fuel efficiency in the aviation and maritime sectors

The aviation and marine sectors operate internationally, making for a complex environment in which to negotiate energy productivity. The Commonwealth will continue to work with these sectors on a range of specific measures. Status: Expansion. Owner: Commonwealth

11. Reduce barriers to financing

There remain  a range of barriers which can limit efficient private sector investment in energy productivity improvements. A range of measures are addressing these issues, including existing projects under the Clean Energy Finance Corporation and work streams under the G20. Status: Ongoing. Owner: Commonwealth

12. Improve energy productivity in government operations

Governments should lead by example. Action undertaken by governments on their own energy productivity can have flow on benefits to the economy, not only through energy and cost savings and emissions reductions, but through leadership and driving market development in related services and technologies. Governments have undertaken a range of commitments, for example the Commonwealth commits to review and revise its own policy by the end of 2016. Status: New/expanding. Owner: Jurisdictions

MORE PRODUCTIVE SERVICES

Innovation support

13. Support innovation and commercialisation

There is currently under-investment in innovation and commercialisation of new technologies and processes to improve energy productivity. These are critical elements in ensuring Australia’s ongoing competitiveness. The Commonwealth is considering a range of measures to broaden support for innovation in energy productivity in line with the innovation agenda. Status: Expansion. Owner: Commonwealth

14. Improve light vehicle efficiency

Based on international experience, there are significant opportunities in Australia’s passenger vehicle fleet to promote improved productivity, fuel cost savings and reduced emissions. A new Ministerial Forum is considering options for improvement with reports on options due to be delivered to the Forum in June 2016 and March 2017.
Status: New. Owner: Commonwealth

15. Drive innovation in transport and infrastructure systems

Australia has an opportunity to achieve significant energy productivity improvements and reductions in emissions through development, adoption and deployment of Intelligent Transport Systems (ITS). A new National Policy Framework for ITS is being developed and is due for completion in mid-2016. Status: Ongoing. Owner: COAG Transport and Infrastructure Council

16. More liveable, accessible and productive cities

If not effectively planned our built environment can make it very difficult to adjust to change like energy price pressures or emissions reduction needs. The Commonwealth has established a Cities Taskforce to support development of the Commonwealth’s agenda for cities. Initial proposals are expected in early 2016. Status: New. Owner: Commonwealth

17. Promote leading practice

There is potential to drive energy productivity innovation through the promotion and recognition of leaders. The Commonwealth will continue current international work in this area. The Commonwealth will also seek wider options to drive innovation linked to Measures 3 and 7. Status: New. Owner: Commonwealth

18. Collaborate internationally

Collaboration between international governments and organisations on energy productivity can achieve better outcomes more quickly and reduce regulation through greater alignment. A range of work streams are underway, including through the G20.
Status: Expansion. Owner: Commonwealth

Competitive modern markets

19. Emerging technologies in the electricity system

A strategic work programme is considering the impacts of technological and market changes in the electricity sector, such as the emergence of solar PV and storage options, which are challenging the centralised, grid-based supply model on which the energy regulatory frameworks are based. This work will assess whether existing regulatory arrangements are likely to be sufficiently flexible to enable future market change which will allow customers to benefit from innovative products and services while ensuring that appropriate consumer protections and safeguards. Status: New/expansion. Owner: COAG Energy Council

20. Deliver a Gas Supply Strategy

The eastern gas market is undergoing a period of rapid transformation due to being export linked with the commissioning of liquefied natural gas (LNG) trains in Queensland, characterised by uncertainty about gas price and availability outcomes, drivers and policy responses. A range of gas strategies are being progressed which are expected to report back throughout 2016. Status: Ongoing. Owner: COAG Energy Council

21. Reform governance to keep pace with change

In order to increase energy productivity, energy markets must be agile in adjusting to market change and supporting policy and governance must be similarly responsive. Recommendations from the Review of Governance Arrangements for Australian Energy Markets are being progressed. Status: Expansion. Owner: COAG Energy Council

22. Develop an Energy Use Data Model for better planning

Growing gaps in energy use data in a rapidly changing market over the last decade have already created substantive challenges in forecasting and policy development, contributing to inefficient infrastructure development. An Energy Use Data Model is being developed with CSIRO to rectify this situation. Initial research outputs and datasets are expected in 2016 with the system operational within three years. Status: New. Owner: Commonwealth

23. Competitive smart meter rollout

Advanced metering will be critical in supporting flexible prices, empowering consumers to better manage their bills, increasing efficient management and planning in networks, and effectively managing new technologies and services. The Australian Energy Market Commission is currently finalising a Rule change to support a market-led rollout of advanced meters. The Australian Energy Market Operator will be developing market platforms to deliver services enabled by smart meters. These measures are expected to be in place by the end of 2017. Status: Ongoing. Owner: COAG Energy Council/AEMC

24. Improve the exchange of market data

Barriers currently exist in energy market data systems to the integration of new products and services and effective competition. Systems need to be flexible enough to adapt. Data exchange mechanisms need to facilitate the development of innovative services which support competition and inform consumer decision making at the point of purchase, based on real-time access to their energy use profiles. The Council will engage with market institutions during 2016 to understand whether barriers exist to this occurring.
Status: New. Owner: COAG Energy Council

25. Build service provider capacity

Australia must build the capacity of a number of supporting sectors, particularly the energy efficiency sector and key trades, to help all sectors improve their efficiency. Governments will engage with industry bodies to identify and address any critical gaps in capacity. Status: Expansion. Owner: Commonwealth

26. New market mechanisms for demand response

New market arrangements could allow new innovative demand-side services to engage in the wholesale market and support embedded networks. The Australian Energy Market Commission is currently considering Rule changes for a number of such mechanisms proposed under the Power of Choice review. Status: Ongoing. Owner: COAG Energy Council/AEMC

27. Promote competitive retail markets in electricity and gas

Competitive energy markets provide efficient energy prices for the long term interest of all energy consumers and efficient operation of the energy system overall. The Council is undertaking complementary work streams to promote competition including improving the timeliness and accuracy of customer switching processes and improving retail price reporting. Status: Ongoing. Owner: COAG Energy Council

28. Monitor the wholesale electricity market

To build on the productivity gains from the establishment of the wholesale market, the Council will introduce a market monitoring function to identify the causes of inefficiencies as a means of determining what, if any, further reforms to the market arrangements are required. Status: Ongoing. Owner: COAG Energy Council

29. Adopt National Frameworks

Consistent national frameworks minimise duplication of regulations that could increase burdens for market participants, potentially putting downwards pressure on prices and improving productivity. The Council is supportive of Australia-wide adoption of the national frameworks. The Council supports the Northern Territory and Western Australia’s adoption of the national frameworks. Status: Expansion. Owner: COAG Energy Council

Consumer protections

30. Deliver a new Equipment Energy Efficiency (E3) prioritisation plan

Through the Equipment Energy Efficiency (E3) programme, governments increase the energy efficiency of new appliances and equipment through mandatory energy efficiency regulations. The recent independent review of the programme highlights that it is contributing over $1 billion in avoided energy costs to the Australian economy annually, while avoiding carbon emissions by an estimated 11.6 million tonnes per annum. The Council commits to a new E3 prioritisation plan, seeking to substantially increase the benefits while ensuring that the compliance costs to businesses are minimised to the extent possible, consistent with maintaining a robust regulatory regime. Status: Expansion. Owner: COAG Energy Council

31. Advance the National Construction Code

Energy efficiency requirements in building codes for both residential and commercial buildings are out of date with recent technologies. The Council will facilitate engagement with the Australian Building Codes Board and Building Ministers Forum to consider changes to the Code so as to achieve better energy efficiency outcomes for Australia’s buildings within the next cycle of revision of the National Construction Code, to be complete by 2019. Status: Expansion. Owner: COAG Energy Council

32. Improve compliance with building energy efficiency regulation
The Council recognises the importance of improving compliance with the energy performance requirements of the National Construction Code. To achieve this, the Council will continue to support the National Energy Efficiency Building Project. The Council will also consider what additional activities may be needed to improve compliance in the context of any new or changed rating and disclosure arrangements arising through work under this plan. Status: Expansion. Owner: COAG Energy Council

33. Review the National Energy Customer Framework (NECF) for disruptive technologies

In December 2014, the Council committed to undertake an assessment of the differences in how jurisdictions have applied the NECF. In addition the Council agreed to examine whether there is a need to enhance energy frameworks in light of the ongoing change taking place in competitive energy markets, particularly as it regards the introduction of new technologies, products and services. This will be linked to Measure 19.
Status: Ongoing. Owner: COAG Energy Council

34. Review the Fuel Quality Standards Act 2000

Ongoing progression and availability of higher quality fuels in Australia are important for the availability of innovative new fuel efficient vehicles in the Australian market. A review of the Fuel Quality Standards Act 2000 was announced in June 2015. Status: Ongoing. Owner: Commonwealth