EFFICIENCY LEADERSHIP - Environment...

six steps to EFFICIENCY LEADERSHIPthe path TO ENERGY and water EFFICIENT HOMES AND BUSINESSES

November 2015

CONTENTS

SUBTITLE

29 Step1.Improvestandardsforresidentialbuildings

32 Step2.Facilitateaccessibleandaffordablefinance

35 Step3.Createacultureofefficiencyandprovide relevantinformation

35 Step4.Delivertargetedprogramsforthosemostin need

39 Step5.Upgradegovernmentbuildings

41 Step6.Driveimprovementsinnon-residential buildings

18 Germany

20 California

22 Vancouver

24 Asnapshotofotherinitiatives

07 Reducegreenhouseemissions

10 Easefinancialpressureonhouseholdsandbusiness

12 Create jobs

13 Enhancesocialequity

15 Improvecommunityhealthandwellbeing

16 Savewaterforourrivers

17 Avoidneedforadditionalsupply

six steps to energy and water efficiency leadership

Victoria can lead again on efficiency

04 Thecaseforaction

what does leadership look like now?

Benefits of investing in energy and water efficiency

introduction

SUBTITLE

50 Appendix1.Homeretrofitcostsandsavings

52 Appendix2.Efficiencyandjobs

Conclusion

Appendices

LeadAuthor:AnneMartinelli

Email:a.martinelli@environmentvictoria.org.au

Phone:(03)93418100

ContributingAuthors:NickRoberts,MarkWakeham

Level2,60LeicesterSt,CarltonVictoria3053

(03)93418100,admin@environmentvictoria.org.au

www.environmentvictoria.org.au

This report is printed on 100% recycled paper.

06 44 Geelong

46 Melbourne’snorthernsuburbs,LatrobeValley

case study: retrofitting for vulnerable regions

4 SIX STEPS TO EFFICIENCY LEADERSHIP | THE PATH TO energy AND water EFFICIENT HOMES AND BUSINESSES

The case for action Fromclimatechange,tothepressuresonmanufacturingandescalatingsocialinequality,Victoriafacesmultipleenvironmental,economicandsocialchallengesinthetwenty-firstcentury.

Buttherearealsoenormousopportunities–waystomakeourcitiesandinfrastructuremoreresilient,ourbusinessesmorecompetitiveandoursocietymoreequitable.

Oneofthemostsignificantopportunities,toooftenoverlooked,isimprovingenergyandwaterefficiency,whichcandeliver‘win-win-win’outcomesforVictoria’speople,environmentandeconomy.

Savingenergyandwatercutsthecostoflivinganddoingbusiness,particularlyinthefaceofrisingutilityprices.Efficienthomesaremorecomfortableandhealthiertolivein,especiallyinextremeweather.Investinginefficiencycreatesthousandsofjobsandpostponesoravoidstheneedforcostlyandenvironmentallydestructiveadditionalwaterorpowersupply.Andreducingconsumptioncutsgreenhousepollutionandsaveswaterforourrivers.

Sinceitselectionin2014,theAndrewsGovernmenthasshownencouragingsignsthatitunderstandsthecriticalrolethatefficiencycanplayinsecuringVictoria’seconomicandenvironmentalfuture.

TheVictoriangovernment’senergyefficiencyandproductivitystatementSaving Energy, Growing Jobs,thepromiseofamoredetailedstrategy,andtheannouncementofincreasedVictorianEnergyEfficiencyTargetsto2020arewelcomefirststeps.

However,afterfouryearsofinactionandbackwardstepsunderCoalitiongovernmentsatthestateandfederallevel,thereisnomoretimetowaste.ItisvitalthattheVictoriangovernmentnotonlysetsoutanambitiousagenda,butalsoaclearandresourcedpathforimplementation.

01introduction

CentraltoanambitiousefficiencyagendaforVictoriaisacommitmenttotransformthequalityofourhomes.EnvironmentVictoria,alongsideourOneMillionHomesAlliancepartners,hasbeenworkingsince2009foracommitment“thatVictoria’shousingstockmeetsanaverage5Starequivalentand100litre/person/daystandardwithin10years”.

Thisreport,consistentwiththeAlliance’srecentlyreleased2025 Roadmap: Overcoming the Barriers to Energy and Water Efficient Housing,1 setsoutsixambitiousyetachievablestepsforachievingthehousingstockgoal,aswellasimprovingnon-residentialbuildingperformance.Thesixstepsare:

1. Improve standards for residential buildings

2. Facilitate accessible and affordable finance

3. Create a culture of efficiency and provide relevant information

4. Deliver targeted programs to those most in need

5. Upgrade government buildings

6. Drive improvements in non-residential buildings

Thesesixstepsaddressthekeybarrierswhichpreventmanyhomeowners,landlords,rentersandbusinessesfromtakingactiontoreducetheirenergyuse–primarilylackofincentive,upfrontcostsandlackofinformationrelevanttotheirhomeandsituation.

Introducingachievablestandardsforhomeownersandlandlordswillprovideincentive,whileimprovingaccesstoaffordablefinanceandrelevantinformationwillassistpropertyownerstomeetthosestandards.Importantly,clearstandardsalsohelpcreateastablepolicyenvironmentwhichencouragessustainedinvestmentandjobsgrowth,avoidingthe‘boom-bust’scenarioswhichhaveplaguedemergingindustriesinthepast(suchastheexperienceofthewatertankindustryduringthedrought).2

1 OneMillionHomesAlliance, www.onemillionhomes.org.au

2EnvironmentVictoria2009,Victoria – The Green Jobs State: Seizing the opportunities,p.27

Thesesixstepsfocusprimarilyonusingenergyandwatermoreefficientlyincitiesthroughupgradingindividualbuildings.Wideropportunitiestoconservewaterbymakingourcities,townsandneighbourhoodsmore‘watersmart’andmakingmoreeffectiveuseofalternativesupplies(stormwater,greywaterandrainwater)areaddressedinaseparateforthcomingreportSix Steps to Water Leadership.

Beyondtheactionsoutlinedinthisreport,acomprehensiveVictorianpolicyagendashouldalsoencompassadvocacyfor,andcontributionto,nationalprioritiessuchas:

• Ambitiousnationalgreenhouseemissionsreductiontargetsandacarbonpricingscheme

• EstablishmentofaNationalEnergySavingsInitiativewhichhasstalledsince2012

• Nationalenergymarketreform,includingchangetotariffstructureswhichundermineincentivesforefficiency

• ReinstatementofthefederalEnergyEfficiencyOpportunitiesProgramwhichdroveenergyefficiencyimprovementsinlargeenergy-usingbusinessesnationally

• Bestpracticevehicleemissionsstandards

• Bestpracticenationalefficiencystandardsforappliances

• EnhancedNABERSEnergyratingandCommercialBuildingDisclosureprograms.

MakingbetterandsmarteruseofpreciousenergyandwaterresourcesrepresentsoneofVictoria’sbiggestuntappedopportunitiesandiscriticaltoourfuture.Butlikeanythingworthwhile,it’snotsimple.Realactionwillrequireleadership,investmentandwell-designedpoliciesthatcreateincentivesforactionandinvestmentbyotherplayers.

TheAndrewsGovernment’sSaving Energy, Growing Jobsstatementhasarticulatedavisionfor“amoreefficient,productiveandresilientstate”.It’stimefortheVictoriangovernmenttoturnthispromiseintoactionwithanambitiousandresourcedplantomakeVictoriamuchmoreenergyandwaterefficient.

CHAPTER 01INTRODUCTION

The International Energy Agency recently identified improving energy efficiency as the number one global action to achieve peak emissions by 2020.

Decadesofdelayinrespondingeffectivelytoclimatechangehasledustothepointwherewemayalreadybe‘lockedin’totwodegreesofwarmingbasedongreenhouseemissionsalreadyintheatmosphere.Furthermore,thereisgrowingconcernthattwodegreesdoesnotrepresentasafe‘cap’butthatirreversibletippingpointsarealreadyoccurring.Victoria,liketherestoftheworld,facesanurgenttasktoreduceemissionstozeroandtransitiontorenewableenergyassoonaspossible.

Nearly70percentofVictoria’semissionscomefromthestationaryenergysector–theelectricityandgasweuseinourhomes,businessesandindustry.Over80percentofVictoria’selectricityisgeneratedbyburningbrowncoal, whileVictorianhouseholdsusefarmoregasthanhouseholdsinotherstates,mainlyduetowinterheating.3

Reduce greenhouse emissions

02Benefits of investing in energy and water efficiency

3DepartmentofStateDevelopment,BusinessandInnovation2014,Victoria’s Energy Statement; ConsumerUtilitiesAdvocacyCentre2014,Our Gas Challenge.

4DepartmentofSustainabilityandEnvironment2012,Greenhouse Gas Inventory.

Figure 1. Victoria’sgreenhousegasemissionsbysector.4

CHAPTER 02Benefits of investing in energy and water efficiency

However,theefficiencyofductedgasheatingsystemscanbeaslowas50percent–meaningthathalfofthecostlyandpollutinggasweburnisimmediatelywasted.5Cuttingwastedenergybyimprovingtheefficiencyofourbuildingsisthereforeoneofthemosteffectivewaystoreduceoverallemissions.TheInternationalEnergyAgencyrecentlyidentifiedimprovingenergyefficiencyasthenumberoneglobalactiontoachievepeakemissionsby2020andsignificantdeclinesby2030.InVictoria’scase,thebenefitofimprovingenergyefficiencyislikelytobeevengreaterthanindicatedinFigure2,duetotheparticularlyhighemissionsintensityofthestate’sbrowncoalelectricitygeneration.

Figure 2. Relativecontributionofmeasurestoreduceemissions,globally.6

8 SIX STEPS TO EFFICIENCY LEADERSHIP | THE PATH TO energy and water EFFICIENT HOMES AND BUSINESSES

5 Forcey,T.2015,Switching Off Gas,MelbourneEnergyInstitute.

6InternationalEnergyAgency2015,World Energy Outlook: Special report on energy and climate change,www.iea.org

7ClimateWorks2010,Low Carbon Growth Plan for Australia,www.climateworksaustralia.org/project/national-projects/low-carbon-growth-plan-australia

8 Ibid.

Figure 3. Marginalabatementcostcurve,Australia.8

A Marginal Abatement Cost Curve (MACC) isorderedlefttorightfromlowestcosttohighestcostopportunities.Thoseappearingbelowthehorizontalaxisofferthepotentialforfinancialsavings,whilethoseabovetheaxisareexpected to come at a net cost. See exampleatFigure3below.

Closertohome,ClimateWorks’Low Carbon Growth Plan provides anestimateofthelowestcostopportunitiestoachievea25percentreductioninAustralia’semissionsbelow2000levelsby2020.TheMarginalAbatementCostCurve(MACC)inFigure3showsthatimprovingbuildingefficiencyoffersemissionsreductionsatzerotonegativecostbecauseefficiencyinvestmentsgeneratecost-savingsbyreducingwaste.7

TheVictoriangovernmentisintheprocessofsettinganewrenewableenergytarget,whichneedstobesignificantlyhigherthanthecurrent20percenttargetifVictoriaistocutgreenhousepollutionfromitselectricitysupplyatthespeedrequired.Improvingefficiencyandcuttingelectricitydemand,particularlypeakdemand,wouldhelpachieveanambitioustargetfasterandatlowercost.

Ease financial pressure on households and businessVictoria’seasyaccesstobrowncoalandnaturalgashasmadeefficiencyalowpriorityformanyhouseholdsandbusinessestodate.However,rapidpricerisesinrecentyearsarestartingtochangethat.Melbourneelectricitypricesroseby84percentbetween2007and2012,9whilegaspriceshaverisen66percentsince2008andarepredictedtocontinuetorise.10

DespitehavingalowerpopulationthanNSW,Victoriahasthehighestresidentialenergyconsumptionofanystate,reflectingourcoolerclimateandgreaterrelianceonheatingcomparedwithotherstates(seeFigure4).

TheaverageVictorianhouseholdspendsaround$2800onhomeenergy(electricityandgas)billseveryyear,witharoundone-thirdofthosecostsgoingonspaceheating(predominantlygas)alone.Aspricesrise,reducingconsumptionisanobviousandcost-effectivewaytomanagecosts.

ThequalityofVictoria’sresidentialbuildingstockisgenerallylow,withhomesbuiltpriorto2005(when5Starbuildingstandardswereintroduced)performingtoanaverageofonly1.8Stars.11

Whileeveryhouseisdifferent,mostpre-2005homeswillseeasignificantimprovementinperformancefromspendinglessthan$5000ontheinstallationorimprovementofbasicmeasuressuchasdraught-sealing,insulation,window-shading,efficientlightingandlow-flowshowerheadsandtaps.Anefficienthomecancutitsenergycostsby40

Figure 4.Totalresidentialenergyconsumptionbystatefrom1990to2010.12

An efficient home can cut its energy costs by 40 percent, translating into annual savings of up to $1000 for the average Victorian household.

9AustralianBureauofStatistics2012,Australian Social Trends, Household Energy Use and Costs, Publication 4102.0.

10ConsumerUtilitiesAdvocacyCentre2014,Our Gas Challenge.

11SustainabilityVictoria2014,Household Energy Report,Fig.1.

12AdaptedfromDepartmentofEnvironment,Water,HeritageandArts2008,Energy Use Residential Sector 1986-2020,Table4,p.31.

percent,translatingintoannualsavingsofupto$1000fortheaverageVictorianhousehold(SeeAppendix1).

Furthermore,asthecostofrenewableenergyhasdeclinedwhilegaspriceshaveriseninrecentyears,goinggas-freeandmakinghomes‘zeronetemissions’throughacombinationofefficiencyandrenewableenergyisnowacost-effectiveoption.13Whereanefficientreversecycleair-conditionerisalreadyinplace,usingthisunitinsteadofgasforheatingcansaveVictorianhomes$658ayear.14

Therearealsosignificantopportunitiesforimprovingbusinessenergyefficiency.Commercialbuildingstypicallyhavelimitednaturallight,inefficientartificiallightingandpoorventilation.Inefficientelectricalappliancesalsogeneratelargeinternalheatloads,whichinturnmeanlargeamountsofartificialcoolingarerequiredtomaintaincomfort.15

HVAC(heating,ventilation,air-conditioning)systemsaccountforthemajorityofenergycostsinatypicalcommercialbuilding,andanefficientsystemcancutthesecostsby40percent.Movingtoasustainablelightingsystemthatmaximisestheuseofnaturallightcancutlightingcostsbyasmuchas80percent.16Significantopportunitieswithlowcapitalrequirementsandshortpaybackperiodsalsolieinimprovingcommercialbuildingenergymanagementsystems,suchasadjustingbuildingsystemcontrolsandoperations,andupgradingsmallappliances.17

Figure 5. AverageenergycostsinVictorianhouseholds.18

Thetermscarbon zero,carbon neutral,zero energy or zero emissionapplytobuildingsthatuserenewableenergysourcesonsitetogenerateenergyfortheiroperation,sothatoverayearthenetamountofenergygeneratedonsiteequalsthenetamountofenergyrequiredbythebuilding.

13BeyondZeroEmissions2013,Zero Carbon Australia Buildings Plan.

14Forcey,T.2015,Switching Off Gas,MelbourneEnergyInstitute.

15BeyondZeroEmissions2013,Zero Carbon Australia Buildings Plan.

16SustainabilityVictoria,www.sustainability.vic.gov.au/services-and-advice/business/resource-efficient-buildings/energy-efficient-office-buildings

17ClimateWorks2010,Commercial buildings emissions reduction opportunities.

18AdaptedfromSustainabilityVictoria2014,Household Energy Report,Fig.1.

19BISShrapnel2014,The economic impact of LNG exports on manufacturing and the economy.

20EnvironmentVictoria2009,Victoria – The Green Jobs State: Seizing the opportunities.

21EnergyEfficiencyCertificateCreatorsAssociation,www.eecca.org.au

Upgrading Victoria’s housing stock to an average 5 star standard by 2025 would support an estimated 13,000 jobs (gross) over ten years and 8500 ongoing jobs.

CREATE JOBS Asthemanufacturingsectorandcarindustrydecline,Victoriawillcontinuetobehithardbyjoblosses.Predictedgaspricerises,drivenbytheexpansionofAustralia’sexportgasindustry,arealsoexpectedtodrivesignificantjoblossesingas-intensivemanufacturing,muchofwhichislocatedinVictoria.19

VictoriaalsofacesachallengetocreateneweconomicandemploymentopportunitiesintheLatrobeValley,toensurethetransitionawayfromcoaltowardsrenewableenergyismanagedinanorderlyandequitableway.TheVictoriangovernmenthasannouncedacommitmenttoa$20millionNewEnergyJobsFundandidentifiedenergyefficiencyasaprimeopportunityforjobsgrowth.

UpgradingVictoria’shousingstocktoanaverage5Starstandardby2025,throughamixofdirectinvestment,improvedstandards,incentivesandinformation(asoutlinedinthesixstepslaterinthisreport)wouldstimulateanestimated$9.6billionofpublicandprivateinvestmentover10years.Thiswouldsupportanestimated13,000jobs(gross)overtenyearsand8500ongoingjobs(seeAppendix2).

Jobsinenergyefficiencytendtobeinsmalltomediumsizedbusinessesandthecommunitysectorandcoverarangeoflowtosemi-skilledoccupationsintrades,servicesandmanufacturing.20TheVictorianEnergyEfficiencyTargetschemeisestimatedtobesupportingatleast2000Victorianjobsandthereisscopetobuildonthis.21

Right: Goodqualitydraught-proofingisoneofthemosteffectivewaystosaveenergyandmoneyinVictoria’sclimate.

Thesefiguresarefor‘gross’jobscreated,ameasurewhichdoesnotmakeadistinctionbetweenjobsdrawnfromelsewhereintheeconomyandjobswhichareadditionaltobusinessasusual.However,astheenergyefficiencysectorisrelativelymorejobs-intensivethantheeconomy-wideaverage,andsupportsjobsacrossarangeofskilllevels,itcanbeassumedthatinvestmentinanefficiencyprogramwouldcreatenewopportunities,particularlyforlow-skilledanddisadvantagedworkers,anddrawunemployedworkersintotheworkforce.

Enhance social equityTheadverseimpactsofpoorqualityhousingarenotspreadevenlyacrossourcommunity.Low-incomeanddisadvantagedhouseholdsaremorelikelytoliveinpoorqualityhomes,relyoninefficientappliancesandspendagreaterproportionoftheirdisposableincomeonenergy.

Consequently,manylow-incomehouseholdsareeitherstrugglingtopaytheirbillsaspricescontinuetorise,rationingtheirenergyuse,orcuttingexpenditureonotheressentialssuchasfood.22

TheimpactofenergyunaffordabilityformanyVictorianhouseholdscanbeseeninthealarmingriseindisconnectionrates–anincreaseof359percentforelectricityand239percentforgassince2008-09.23Atthesametime,theproportionofenergycustomersparticipatinginretailerhardshipprogramshasrisen35percent,andaveragedebtonentrytotheprogramshasrisenbymorethan50percentsince2009.Concessionsforeligiblecustomersarenotsucceedinginkeepingbillsaffordable,whilemanynon-concessionhouseholdsarealsoexperiencinghardship

Left:Peopleonloworfixedincomesmissoutonthebenefitsofefficiencybecausetheycan’taffordtheupfrontcostsofhomeimprovementsthatcutwasteandsavemoney.

Low-income and disadvantaged households are more likely to live in poor quality homes, rely on inefficient appliances and spend a greater proportion of their disposable income on energy.

22Chester,L.2013,The impacts and consequences for low-income Australian households of rising energy prices,UniversityofSydney;AustralianCouncilofSocialService2013,Energy Efficiency and People on Low Incomes.

23ConsumerActionLawCentre2015,Heat or Eat.

(oftenlargefamilieswithlargemortgagesandhighusage).24

Furthermore,arecentanalysisbyAGLoftheirhardshipcustomersfoundthatadisproportionatelyhighnumberliveinpublicorprivaterentalhousing.Forty-sevenpercentwererenters,comparedwiththeVictoria-widerateofabout28percentrenters(seeTable1).25Tenantstypicallyhavefeweroptionsthanhomeownersforreducingconsumptionbecausetheyfacea‘splitincentive’:landlordshavelittlereasontoinvestinbuildingimprovementsorefficientfixedappliancesbecausetenantsareresponsibleforpayingutilitybills.

BecauseVictoria’sutilitiesconcessionframeworkispercentage-based,risingpricesandbillsinevitablydriveincreasesinthegovernment’sconcessionsbudget.Thepreviousgovernmentrespondedtothesebudgetrisksbyintroducingacaponconcessionpaymentswhichitestimatedwouldsave$9millionin2013-14.However,thiscapposessignificantriskstothefairnessandeffectivenessofVictoria’sconcessionssystem.26

Incontrast,theOneMillionHomesAlliance(comprisedofVictoria’sleadingconsumer,socialjusticeandenvironmentorganisations)estimatesthataddressingtherootcauseofrisingbudgetdemandsby

24VictorianCouncilofSocialService2015,Submission to Inquiry into Financial Hardship Programs of Energy Retailers,Table1.p.6.

25http://aglblog.com.au/2015/09/effective-support-for-vulnerable-households-closing-the-gap-between-capacity-to-pay-and-cost-of-consumption-part-1/

26ConsumerActionLawCentre2013, Winners and Losers.

27AlternativeTechnologyAssociationfortheOneMillionHomesAlliance2012,2.5 billion reasons to invest in efficiency.

retrofittingthehomesofonemillionlow-incomehouseholdswouldsavethegovernment’sconcessionsbudget$2.5billionover20years.27

Home tenure (Victoria)

Owner–fullyowned/mortgage

Renter–Privatehousing

Renter–Public/Communityhousing

Proportion of households

52%(29%/23%)

Table 1.AGLhardshipprogramclientsreceivingKildonanUnitingCarehomeaudits.

New Zealand’s home insulation program delivered net benefits of $1.2 billion, largely through savings in hospitalisation costs and reduced mortality rates for vulnerable groups.

Improve community health and wellbeing Climatechangepresentsatwinchallenge.Onechallengeistomitigateitscausebyreducingemissions,andtheotheristoadapttotheimpactsofmorefrequentandsevereweathereventssuchasdroughtsandheatwaves.

Forexample,theheatwaveinsoutheastAustraliainlateJanuary2009isestimatedtohavecaused374excessdeaths,28whilearecentinternationalstudyconcludedthatmorepeoplediefromtheeffectsofchroniccoldinAustraliathaninSweden.29

Thepoorqualityofourhousingisasignificantcontributortotheseweather-relatedadversehealthimpacts,whichdisproportionatelyaffectlow-incomeanddisadvantagedhouseholds.30Low-incomeanddisadvantagedhouseholdsaremorelikelytoliveinmoreheat-vulnerableareasandtosufferfromchronichealthconditions,whichnotonlycontributetohigherenergyusagebutcanbeexacerbatedbyunhealthylivingconditions.31

Experienceinothercountrieshasshownapositiverelationshipbetweenbuildingqualityandhealthoutcomes.NewZealand’shomeinsulationprogram,forexample,deliverednetbenefitsof$1.2billion,largelythroughsavingsinhospitalisationcostsandreducedmortalityratesforvulnerablegroups.32

Morefrequentandsevereheatwavesunderclimatechangewillincreasehealthrisksforpeoplelivinginpoorqualityhomes,particularlytheelderlyandthosewithchronichealthconditions.

28Hennessy,K.January2014,‘Explainer-whatareheatwaves?’,CSIRO,https://blogs.csiro.au/climate-response/stories/explainer-heatwaves-in-australia/

29Barnett,A.2015,‘Coldweatherisabiggerkillerthanheat–here’swhy’,TheConversation,https://theconversation.com/cold-weather-is-a-bigger-killer-than-extreme-heat-heres-why-42252

30Barnett,G.et.al.2013,Pathways to climate adapted and healthy low-income housing,NationalClimateAdaptationResearchFacility,GoldCoast.

31ACOSS2013;Barnett,G.et.al.2013.

32http://sustainablecities.org.nz/2012/05/

Save water for our riversThesevere1997-2009droughtbroughtMelbourneandVictoriatothebrinkofawatercrisis.ThepreviousLaborgovernment’sresponseoftightwaterrestrictionsandpubliceducationeffectivelyshiftedpublicattitudesinfavourofconservationandachievedsignificantwater-savingoutcomes.

However,thecombinedeffectoftheendofthedroughtandtheconstructionoftheWonthaggidesalinationplantmayhavelessenedpublicconcernaboutwateruseefficiency.Asaresult,residentialwateruseisagainontherise–albeitstillsignificantlylowerthanpriortothedrought.ResidentialwateruseinMelbournein2013-14was160litres/person/day,upfromalowof147litres/person/dayin2010-11.33

ThevastmajorityofMelbourne’swatercomesfromourrivers.Thisextractionisleavingmanyofourriverecosystemstryingtogetbyonhalfthewaterwhichwouldnaturallybethere.

Victoriahasjustrecordeditslowestaveragewinterrainfallsince2006,andMelbourne’swaterstoragesarenowat74percentcomparedwith80percentatthesametimelastyear.34Continueddryconditions

33MelbourneWaterDecember2014,‘WaterOutlookforMelbourne’.

34www.melbournewater.com.au/waterdatawaterstorages

Reducing demand through efficiency can help avoid additional gas, electricity or water supply, which can be costly and environmentally destructive.

Right: Onaverage,halftheYarraRiver’sflowsareextractedforMelbourne,leavingtheriverinpoorhealth.

35Forcey,T.2015,Switching Off Gas,MelbourneEnergyInstitute,p.40.

36Ibid,Fig.20.

combinedwithourgrowingpopulationwillonlyworsenthepressureonourpreciousriversandwetlands,unlesswemaintainastrongfocusonreducingconsumptionthroughefficiency.

Avoid need for additional supplyReducingdemandthroughefficiencycanhelptoavoidtheneedforinvestmentinadditionalgas,electricityorwatersupply,whichcanbecostlyandenvironmentallydestructive.

Forexample,recentfindingsbytheMelbourneEnergyInstitutethatachievableenergysavingsinthebuildingssectoraremorethanenoughtomeetfutureindustrialgasneedsunderminesthecasefordevelopmentofanenvironmentallyriskyunconventionalgasindustryinVictoria(seeFigure6below).35

Efficiencyalsomoderatespeakelectricitydemand,whichhelpsavoidexpensiveinvestmentingridinfrastructurethathasbeenakeydriverofpricerisesinrecentyears.

Andfailingtomaintainafocusonwaterefficiencyrisksgreaterfuturerelianceonexpensiveandenergy-intensivedesalination–withconsequentimpactsonhouseholdwaterbillsandgreenhouseemissions.

Figure 6.Demandinthelargerindustrialsectorcomparedwithgas‘saved’inthecommercial,residentialandsmallerindustrialsector(MEIScenario).36

WhileVictoriahasmaderelativelyslowprogress,therestoftheworldhasbeenreapingtheenvironmentalandeconomicrewardsofimprovedefficiency.

GermanyKey points:

New buildings to be climate neutral by 2020, and entire building stock to reduce energy use by 80 percent by 2050

Germany’s state development bank’s building renovation loan program has supported the efficiency refurbishment or construction of more than 3.8 million homes and 2100 municipal buildings since 2007

Germanyprovidesaleadingexampleofanefficiencyframeworkthatmatchesclearandambitiouspolicyobjectiveswiththeprovisionofaffordablefinancetodriveimplementation.TheAmericanCouncilforanEnergyEfficientEconomy(ACEEE)namedGermanynumberoneintheworldforenergyefficiencyinits2014Scorecard,citingthecountry’scomprehensiveenergystrategy,buildingcodes,retrofitpoliciesandtaxcreditandloanprograms.37

TheGermangovernmenthassetagoalofreducingenergyconsumptionby20percentby2020(comparedto2008)and50percentby2050.Germanyaimstomakenewbuildingscarbonneutralby2020,andtoreduceenergyconsumptionacrossitsentirebuildingstockby80percentby2050.

TheNational Energy Efficiency Action Planoutlinesmeasuresforimplementation,guidedbytheprinciples‘Supplyinformation’,‘Providesupport’and‘Demandaction’.

AkeymechanismfordrivingefficiencyupgradesunderthePlanistheCO2BuildingRenovationProgramme,whichprovidesfundingto37http://cleantechnica.com/2014/07/21/germany-1-

world-energy-efficiency/

03WHAT DOES LEADERSHIP LOOK LIKE NOW?

Germany’s leading efficiency framework matches ambitious policy objectives with affordable finance to drive implementation.

38www.gtai.de/GTAI/Navigation/EN/Meta/Press/press-releases,t=germany-tops-world-energy-efficiency-ranking,did=1051702.html

39GermanFederalMinistryforEconomicAffairsandEnergy,CO2BuildingRenovation,www.bmwi.de/EN/Topics/Energy/Buildings/co2buildingrenovation

theGermandevelopmentbankKfW’sEnergy-EfficientBuildingandRefurbishmentProgram.Thisallowsittoofferverylowinterestratesof1-2percenttofundconstructionofefficientnewhomesandtoretrofitexistingbuildings.

TheGermangovernmentcurrentlyprovidesfundingtotheprogramofabout1.8billioneurosperyear,withafurther200millioneurosexpectedtobeaddedfrom2016,bringingtotalannualfundingtotwobillioneuros.Morethan187billioneuroshavebeeninvestedinbuildingupgradessince2007,with34billioneurosofprivateinvestmentin2013alone.38

Theprogramhassupportedtheefficiencyrefurbishmentandconstructionofmorethan3.8millionhomes,andmorethan2100buildingsusedbylocalauthoritiesandwelfareinstitutions–suchasofficebuildings,schoolsanddaycarecentres.

TheActionPlanalsoobligeslarge-scaleenterprisestoconductenergyauditsandsetsstandardsfornewinstallationsandbuildings.Inupto500energy-efficiencynetworks,enterpriseswillalsobeexpectedtodefinejointefficiencytargetsthemselvesandimplementtheseasagroup.Subsidiesofupto30percentarealsoavailableforSMEstoimproveefficiencythroughtechnologyandequipmentupgrades.39

The Kranichstein Passive House in Darmstadt (pictured below) was built in 1990, and was Europe’s first inhabited multi-family house to achieve a documented heating energy consumption of below 12 kWhm2 per year.

CaliforniaKey points:

All new residential buildings to be zero net energy by 2020, and all new commercial buildings to be zero net energy by 2030

50 percent increase in energy efficiency of existing buildings by 2030

More than $65 million in household bill savings and 1.5 million jobs created since the 1970s

Californiahasbeenaleaderinbuildingefficiencystandards,financingandretrofitprogramssincethe1970s.The2008California Long-Term Energy Efficiency Strategic Plansetanumberofgoals,includingthatallnewresidentialbuildingsbezeronetenergyby2020,andallnewcommercialbuildingsbezeronetenergyby2030.Furthermore,theplanofferedalleligiblelow-incomecustomerstheopportunitytoparticipateinenergyefficiencyprogramsby2020.40

California’sefficiencygoalshaverecentlybeenreiteratedbyGovernorBrowninhisJanuary2015inaugurationspeech,inwhichhesetagoaltodoubletheefficiencyofCalifornia’sbuildingsby2030andtransitiontocleanerfuelsforspaceandwaterheating.ThesegoalshavenowbeenenshrinedinlegislationwiththepassingofalandmarkclimatebillpackageinOctober2015.41

TheExisting Buildings Energy Efficiency Action Planwasreleasedin2015withaparticularfocusonaddressingthebarrierstoupgradingolderbuildingsandcreatingtheconditionsforscalingupefficiencyupgrades.42

CaliforniahasalsopioneeredtheuseofPropertyAssessedCleanEnergy(PACE)financingwhichallowslocalgovernmentstoofferloansforefficiencyupgrades.Loanpaymentstaketheformofanassessmentaddedtothepropertytaxonthebuilding,typicallywitha20-yearpayoffperiod.43

In2012,CalifornialaunchedtheUS’slargestPACEprogram–CaliforniaFIRST–offeringloanstoownersofoffice,multi-familyresidential,retail,industrialandagriculturepropertiesin14countiesand126cities.Eligibleimprovementsincludeinsulation,lighting,HVACsystems,onsiterenewableenergyandwater-savingupgradessuchaslow-flowplumbingfixturesandgreywatersystems.

Thetermscarbon zero,carbon neutral,zero energy or zero emissionapplytobuildingsthatuserenewableenergysourcesonsitetogenerateenergyfortheiroperation,sothatoverayearthenetamountofenergygeneratedonsiteequalsthenetamountofenergyrequiredbythebuilding.

Importantly, and most relevant to Australia, the Californian approach targets water as well as energy use.

CHAPTER 03WHAT DOES LEADERSHIP LOOK LIKE NOW?

40CaliforniaPublicUtilitiesCommission2008,California Long-Term Energy Efficiency Strategic Plan,www.cpuc.ca.gov/PUC/energy/Energy+Efficiency/eesp/

41http://focus.senate.ca.gov/climate

42www.energy.ca.gov/ab758/documents/

43https://californiafirst.org/

44www.nrdc.org/energy/ca-efficiency-success-story.asp

Importantly,andunlikemostotherbuildingefficiencyplansaroundtheworld,theCalifornianapproachtargetswateraswellasenergyuse.ThisreflectsthecriticalimportanceofwatertoCalifornia,whichiscurrentlyinthegripofaseveredrought,andwhich,likeAustralia,facessignificantriskstowatersecurityinthehotteranddrierfuturepredictedunderclimatechange.

Todate,California’sbipartisancommitmenttoefficiencyhassavedhouseholdsmorethanUS$65billion,helpedlowerresidentialelectricitybillsto25percentbelowthenationalaverage,andledtothecreationof1.5millionfull-time-equivalentjobssincethe1970s.44

California Governor Jerry Brown (pictured below) has just signed landmark legislation to combat climate change by setting targets to increase the state’s renewable electricity use to 50 percent and double energy efficiency in existing buildings by 2030.

VancouverKey points:

Emissions from existing buildings to be reduced by 20 percent by 2020, and all new buildings to be zero net emissions by 2020

80 percent of priority actions have been achieved, including a 7 percent decrease in community greenhouse gases since 2007

Vancouver,Canada,hassetagoalofbecomingthe“greenestcityintheworldby2020”andhasdevelopeditsGreenest City 2020 Action Plan(GCAP)toseta“coursetowardrealizingahealthy,prosperousandresilientfutureforourcity”.45

Basedonextensivecommunityconsultation,theGCAPsetsgoalstoreducecity-widegreenhouseemissionsby33percentby2020andtodoublethenumberof‘greenjobs’over2010levelsby2020.

Emissionsfromexistingbuildingsaretobereducedby20percentby2020,andallnewbuildingstobezeronetemissionsby2020.

TheGCAP andsubsequentEnergy Retrofit Strategy for Existing Buildings outlinedetailedcommitmentstoachievethesegoals,includingquantitativebaselineindicatorsagainstwhichprogresscanbemeasured.TheRetrofitStrategyspecificallyfocusesonthekeybarrierspreventingstakeholdersfromtakingactioninfourprioritysectors–detachedhouses,multi-unitresidentialbuildings,commercialandindustry–andtheopportunitiesforgovernmentinterventiontodriveinvestment.46

Specificactionstargetedatresidentialbuildingsinclude:

• Improveregulationsthroughinclusionofenergyefficiencyrequirementsinbuildingbylaws

• Supportvoluntaryactionthroughrebatesandincentives,andactivemarketingtoraiseawarenessthattheyareavailable

• PartnerwithenergyretailersandLandlordBC(BritishColumbia’speakbodyrepresentingrentalpropertymanagers)toexpandtheGreenLandlordprogram,evaluateitseffectivenessandstrengthenasneeded.47

45CityofGreaterVancouver2012,Greenest City 2020 Action Plan,p.5.

46http://vancouver.ca/green-vancouver/greenest-city-action-plan.aspx

47http://vancouver.ca/home-property-development/bank-and-utilities-incentives.aspx

TheCityhasjustpublishedanimplementationupdatewhichshows80percentoftheoriginalpriorityactionssetin2011havebeenachieved,includingasevenpercentdecreaseincommunitygreenhousegasessince 2007.48

Vancouver’s Greenest City 2020 Action Plan was developed through extensive community consultation, such as the greenest city camp.

48http://vancouver.ca/files/cov/greenest-city-action-plan-implementation-update-2014-2015.pdf

A snapshot of other initiativesEuropean UnionTheEuropeanUnion’sEurope 2020 Strategysetatargetof20percentenergysavings(onbusinessasusual)by2020,whichhassincebeenincreasedto27percentorgreaterby2030.49Keyachievementstodateinclude:

• Newbuildingsconsumehalftheenergytheydidinthe1980s

• EnergyintensityinEUindustrydecreasedbyalmost19percentbetween2001and2011

• Moreefficientappliancesareexpectedtosaveconsumers€100billionannually–about€465perhousehold–ontheirenergybillsby2020.50

New ZealandNewZealand’sHeatSmartandHealthyHomesinsulationandefficientheatingprogramshavereached260,000homes(around19percentoftotalhousingstock),includingnearly118,000low-incomehouseholdssince2009.ArecentevaluationoftheHeatSmartprogramfounditdeliverednetbenefitsof$1.2billionandabenefitcostratioofapproximately4.3to1–drivenlargelybysavingsinhospitalisationcostsandreducedmortalityratesforvulnerablegroups.51

TheWellingtonSmartBuildingsChallenge,launchedinSeptember2015,requiresparticipatingcommercialpropertyownerstocommittoatargetofatleasta10percentreductioninbuildingenergyuseandattainmentofaNABERSNZratingwithin12monthsofjoiningtheprogram,aswellasyear-on-yearperformanceimprovementsbeyondthatpoint.52

49http://ec.europa.eu/europe2020/europe-2020-in-a-nutshell/index_en.htm

50http://ec.europa.eu/energy/en/topics/energy-efficiency

51http://sustainablecities.org.nz/2012/05/evaluation-of-the-warm-up-new-zealand-heat-smart-programme/

52www.thefifthestate.com.au/property/commercial/nz-wellington-commercial-property-owners-making-buildings-smarter/78033

53www.nsw.gov.au/media-releases-premier/helping-vulnerable-families-energy-bills

Homeowners

New South WalesTheNewSouthWalesgovernmenthasrecentlycommitted$61.5millionforanenergyefficiencyprogram,withafocusonassistanceforlow-incomehouseholdstopurchaseefficientappliances.$16millionhasalsobeenallocatedtoassistingbusinesstoinvestinefficiency.53

TheEnergy Efficiency Action PlanbuildsontheearlierHomePowerSavingsProgram,whichbythetimeitconcludedin2014hadreachedapproximately225,000households(nearly59percentoftheminregionalareas)andincluded30,000homeswhereEnglishisasecondlanguage.Theprogramhasachievedestimatedannualbillsavingsof$36million,whileparticipatinghouseholdsareusing10percentlesspowerperyear.54

•Lackofincentive,lowpriority

•Lackoftimely,trustedinformation

•Upfrontcosthurdles,lackofaffordablefinance

Renters (public and private) Business

•Splitincentive:Landlordsresponsibleforupgradesbuttenantspaybills

•Lackofinformationaboutbehaviourimpactsonusage

•Accesstocapital

•Lackofknowledge,information

•Lackofincentive,lowpriority

•Insufficientscale

Common features of best practice approaches

Set an ambitious goalEstablishspecific,time-basedobjectives,commensuratewiththesizeandurgencyoftheproblem.

Address barriers to actionTargetgovernmentinterventionstothebarrierswhichpreventpeoplefromtakingaction,soastoencouragecomplementaryinvestmentfromarangeofsourcesandmaximisetheimpactofgovernmentinvestment.

Work in partnership Buildontheexperience,expertiseandrelationshipswithinlocalgovernment,thecommunitysectorandretrofitindustrytodelivereffectiveprogramsatscale.

54www.environment.nsw.gov.au/resources/energyefficiencyindustry/140053hpspintev.pdf

Victoria can lead again on efficiencyUnderthepreviousLaborgovernment,VictorialedAustraliabybeingthefirststatetointroduce:

• Mandatoryenergyefficiencytargetforelectricityretailers,implementedthroughtheVictorianEnergyEfficiencyTarget(EnergySaverIncentiveScheme)

• Amandatoryenergy,waterandwasteresourceefficiencyprogramforthebiggestcommercialenergyandwaterusers–EnvironmentandResourceEfficiencyPlans(EREP)

• A5StarEnergyEfficiencyStandardfornewhomes,subsequentlyextendedtoallmajorrenovationsandincreasedtoa6Starstandardin 2011.

The2010VictorianClimate Change White Paperalsoincludedacommitmentto“agoalofimprovingtheenergyefficiencyofVictoria’sexistinghousingstocktoanaverage5Starequivalentenergyratingby2020”.55

However,undertheCoalitiongovernmentelectedin2010,notonlywasnoprogressmadetowardsthisgoal,anumberofbackwardsstepsweretaken.

SinceitselectioninNovember2014,theAndrewsGovernmenthasshownencouragingsignsitintendstoonceagainplayaleadershiproleinenergyandwaterefficiencypolicy.Keycommitmentstodateinclude:

IncreasingtargetsundertheVictorianEnergyEfficiencyTargetschemeandcommittingtofurtherstrengthenthescheme

Extendingcouncil-ratesbasedfinancing(EnvironmentalUpgradeAgreements)fornon-residentialbuildingupgradestoallVictoriancouncils

Environment Victoria is calling on the Victorian Government to recommit to the One Million Homes Alliance goal: That Victoria’s housing stock meets an average 5 star equivalent and 100 litre/person/day standard by 2025.

04VICTORIA CAN LEAD AGAIN ON EFFICIENCY

55GovernmentofVictoria2010,Taking Action for Victoria’s Future: Victorian Climate Change White Paper,p.17.

ReleasinganenergyefficiencyandproductivitystatementSaving Energy, Growing JobsinJune2015andcommittingtoreleaseamoredetailedstrategyinlate2015.

Afterfouryearsofinactionwhiletherestoftheworldmovedahead,itiscriticalthatthegovernmentdeliversonthisearlypromisebyoutlininganambitiousefficiencyagendaforVictoria.

Thestartingpointshouldbethearticulationofacleargoalagainstwhichprogresscanbemeasured.EnvironmentVictoriaiscallingontheVictoriangovernmenttorecommittotheOneMillionHomesAlliancegoal:

“That Victoria’s housing stock meets an average 5 Star equivalent and 100 litre/person/day standard by 2025.”56

Quantitative,measurabletargetsinotherpolicyareasincludingcommercialandgovernmentbuildingsarealsoneeded.

56OneMillionHomesAlliance2015,2025 Roadmap to Energy and Water Efficient Homes,www.onemillionhomes.org.au

Achievinga‘stepchange’improvementinthequalityofVictoria’sbuildingstockwithin10yearswilldependonallstakeholders–homeandbusinessowners,tenantsandlandlords–havingtheincentiveandpracticalassistancetheyneedtotakeaction.

ImplementingthesesixambitiousyetachievablestepswouldaddressthebarrierspreventingVictorianhouseholds(seeFigure7)andbusinessownersfrominvestinginefficiency.Creatingastablepolicyenvironmentwhichencouragesinvestment,whiletargetingassistancetothemostvulnerable,willensuregovernmentresourcesdeliverhigh-impactoutcomes.

05SIX STEPS TO ENERGY AND WATER EFFICIENCY LEADERSHIP

Figure 7.Victoria’shousingstockbytenureandbarrierstoenergyefficiencyinvestment.57

Split incentive:

Tenants pay bills but

landlords have control over

quality of dwelling

240,000low income

520,000 total

RENTERS

Tenants lack control over

quality of dwelling

80,000 total

All low income

social HOUSING

NB. Low-income AND VULNERABLE HOUSEHOLDS TOTAL approximately one million

barriers

Lack of timely, trusted

information

Upfront costs unaffordable for asset-rich but cash-poor homeowners

798,000 total

245,000low income

720,000 total

320,000low income

HOMEOWNERS

with mortgage

without mortgage

57 Ibid

Step 1. Improve standards for residential buildings

A visually simple rating systemTheVictorianResidentialEfficiencyScorecardpromisedbytheVictoriangovernmentshouldbedesignedtoaddvaluetoexistingtoolsandbeusedasabasisforimprovedstandards.

Itshouldbevisuallysimpleyettechnicallyrigorous,allowinghomeownerstoeasilyseehowtheirhomeperformsandwhatthatmeansforrunningcosts(foranexample,seetheUKratingsysteminBox1onpage32).TheScorecardshouldofferoneratingscale,rangingfromtheworst-performingexistinghometoazeronetemissionsstandardfornewbuildings,andshouldincorporatebothwaterandenergyefficiency.Tominimisecosts,assessmentscouldbebasedonrelativelysimpleandlow-cost‘tick-box’ratingsatthebottomend(e.g.Doesthehomehaveinsulationandefficientfixedappliances?)tomorecomplexperformance-basedassessmentsatthetop.

Mandatory disclosure at point of sale by 2016Requiringhomeownerstodisclosetheirhome’sefficiencyratingwhentheysellwouldprovidevaluableinformationtopurchasersandcreateamarketincentiveforvendorstoimprovetheirhome.Fullbenefitscanonlyberealisedifdisclosureismandatoryforallhomessothatpurchaserscancompare‘appleswithapples’andmakeinformeddecisions.

In the Australian capital territory vendors are realising a three percent improvement in market value for every 1 star increase in performance.

WiththemedianhousepriceinMelbournenownearly$650,00058 thecost(approximately$400)ofassessinganddisclosingperformancewouldrepresentatrivialproportionofthesalepriceofmosthomes.IntheACT,wheremandatorydisclosureatthepointofsalehasbeeninplacesince1999,vendorsarerealisingathreepercentimprovementinmarketvalue(or$19,500fortheMelbournemedianhouseprice)forevery1Starincreaseinperformance.59

Morethanadecadeafterworkbegantoimplementanationalscheme,itiswellbeyondtimetodeliverthisimportantreforminVictoriabyintroducingmandatorydisclosureatthepointofsalebyJune2016.

Minimum standards at point of lease by 2017DisclosurealonewillbeoflimitedbenefittothemorethanhalfamillionhouseholdsintheprivaterentalmarketinVictoria.Disclosurereliesontheconceptofinformationbeingusedtoexercisemarketpower.However,inatightrentalmarketsuchasMelbourne,mostrenters,andparticularlylow-incomerenters,havelittlemarketpowerandfewopportunitiestodiscriminatebetweenpropertiesofdifferingquality.

ThelowratesofparticipationbylandlordsinrecentschemessuchasthefederalHomeInsulationProgram–evenwhenparticipationcameatzerocost–isevidencethatlandlordscurrentlyhavelittleincentivetovoluntarilyinvestinefficiencyimprovements.60WithpropertyvaluesinmetropolitanMelbournecontinuingtorise,andthousandsofnegativelygearedinvestorsenjoyingsignificanttaxconcessions,itistimetoshiftthebalancebackinfavouroftenantswhoarecurrentlyshoulderingmostofthecostsofourpoorqualityhousingstock.

EffectivelyaddressingthesplitincentivefacedbytenantsandlandlordsrequirestheintroductionofminimumstandardsatthepointofleasebyJune2016,combinedwiththeestablishmentofcomplementaryfinancingmechanismstoenablelandlordstomeetstandards(seeStep2).

Theminimumstandardshouldinitiallybesetatarelativelylowandachievablelevel,requiringupgradeofonlytheworst-performingproperties.Thisminimumstandardshouldbeincreasedovertimethrougheliminationofthelowestratingcategoryby2020,todriveimprovementsacrossourentirerentalstockandensureallrentersbenefitovertime.Proactivestepsalsoneedtobetakentoprotect

It is time to shift the balance back in favour of tenants who are currently shouldering most of the costs of our poor quality housing stock.

CHAPTER 05SIX STEPS TO ENERGY AND WATER EFFICIENCY LEADERSHIP

58Wilson,A.2015,‘HousePriceReportMarchQuarter2015’,DomainGroup,www.apmpricefinder.com.au/wp-content/uploads/2015/06/Domain-Group-House-Price-Report-March-Quarter-2015.pdf

59DepartmentofEnergy,Water,HeritageandtheArts2008,Energy Efficiency Rating and House Price in the ACT,preparedfortheNationalFrameworkforEnergyEfficiency.

60Lovering,M2013,‘Canlow-incometenantsrentanenergyefficienthome?’,AHURIEvidenceReview040,www.ahuri.edu.au/housing_information/review/evrev040

tenantsfromunreasonablerentincreasesandevictions,forexamplethroughtargetedassistanceforlow-incomelandlords.

ThecurrentreviewoftheVictorian Residential Tenancies Act presents anopportunitytoprovideabroadpowerfortheMinisterforConsumerAffairstomakeregulationsforminimumstandardsforallresidentialtenancies,aswellasimprovecomplianceregimes.

Set a goal of Zero Net Emissions and Water-efficient new buildings by 2020Progressiveimprovementinstandardsfornewbuildingsisalsoneededtoensurethetotalstockofunderperforminghomesdoesnotcontinueto expand.

Fiveyearssincetheintroductionofthe6Starstandard,andwithtechnicalassessmentsandbuildingindustrypracticebothdemonstratingtheviabilityof7Starhomes,62itistimetoraisethestandardfornewhomestoatleast7-8starsbyJune2016.

Thisshouldbefollowedbyafurtherstep-changeinnewbuildperformanceby2020,basedona‘wholeofenergyandwatermanagement’approachwhichintegratesenergyefficiency,water-sensitivedesign,alternativewatersourcessuchasrainwaterandgreywater,andrenewableenergy.

Across-sectortaskforceshouldbeestablishedbyearly2016todefinestandardsanddeveloppathwaystowardsachievingthegoalofzeronetemissionsandwater-efficientnewhomesby2020.

Five years since the introduction of the 6 Star standard, it is time to raise the standard for new homes to at least 7-8 stars by June 2016.

Left: TheSolarSollewHouseinSeaholmeisa9Staroff-the-planhomewhichbringshigh-endsustainabilityintothemainstream,usingaboutone-tenthoftheenergyandone-thirdofthewaterofanaverageVictorianhome.62

61www.positivefootprints.com.au

62Forexample,Burbankhomesatwww.burbank.com.au/victoria/sustainability;Pitt&Sherry2010,The Pathway to 2020 for Low Energy, Low Carbon Buildings in Australia,DCC137/2010

Step 2. Facilitate accessible and affordable finance Althoughefficiencyupgradessavemoneyovertime,theupfrontcostscandiscouragemanyhomeownersfromtakingaction.

Whileimprovingstandardswillcreateanincentiveforinvestment,thereisanimportantroleforgovernmentinfacilitatingaccessibleandaffordablefinancetoenablehomeownersandlandlordstomeetstandards.Withbondratesatanall-timelowandfinanceforgovernmentssoaffordable,therehasneverbeenabettertimetoinvestininfrastructure,particularlyinfrastructurewhichhassuchaprofoundeffectonourqualityoflife,ourproductivityandthefairnessofourcommunity.

Improve compliance regimesAneffectivecomplianceregimeisalsocriticaltoensuringstandardsdeliverimprovedperformanceinpractice.ThereareopportunitiestoimproveVictoria’scurrentcompliancearrangements,includingexpandingrandomauditsofcompletedbuildingsandimposingeffectivefinesfornon-compliance.

Box 1. Minimum Rental Standards, United Kingdom.

InFebruary2015,theUKGovernmentannouncedthatfromApril2018,landlordsinEnglandandWaleswillbebannedfromrentingouttheworst-performinghomeswhichfallintothelowestEnergyPerformanceCertificate(EPC)bandsofFandG.Thenewregulationsareexpectedtohelparoundamilliontenantswhoarepayingasmuchas£1000ayearmorethantheaveragebillbecauseofpoorlyinsulatedhomes.63

63www.ukgbc.org/resources/key-topics/new-build-and-retrofit/retrofit-domestic-buildings

Reform the Victorian Energy Efficiency Target schemeTheVictorianEnergyEfficiencyTargetschemerepresentsanimportantsourceoffundingforefficiencyupgrades,andtherecentannouncementofincreasedtargetsrisingto6.5milliontonnesofgreenhousepollutionreductionby2020iswelcome.

Thereisnowanopportunitytofurtherstrengthentheschemeby:

• Expandingallowableactivitiesincludingcommerciallightingupgrades,ceilinginsulationandsplit-systemair-conditioningunitsforheating

• Adoptingproject-basedmethodologiestosupportlargerwhole-of-houseretrofits

• Broadeningparticipationbylow-incomehouseholds,particularlyaccesstohighervaluemeasures.

Extend Environmental Upgrade Agreements to residential buildingsOn-billfinancingarrangements,suchasEnvironmentalUpgradeAgreements(EUA),provideanaffordablemechanismforfundingintegratedefficiencyandrenewableenergyupgrades.

TheVictoriangovernmenthasrecentlyannouncedtheextensionofEUAfinancingforcommercialbuildingstoallVictoriancouncils.Thisisawelcomestepandshouldbefollowedbyanextensiontoresidentialbuildings,sothatallVictoriancouncilsareinapositiontoofferaffordable,rates-basedfinancingforretrofitstohomeownersandlandlords.TheCityofDarebin’sSolar$averprogramprovidesasuccessfulexampleofanEUA-stylefinancingarrangementbeingappliedintheresidentialcontext(SeeBox2onpage34).

However,forasuccessfulroll-outofsuchaschemestatewide,stategovernmentwillneedtoplayanactiveroleinbrokeringpartnershipsbetweencouncilsandprovidersoflow-costfinance,soastoensureallcouncilshaveaccesstothenecessaryfinancialresources.

Theintroductionofimprovedstandards(suchasmandatorydisclosureandminimumrentalstandards)willalsobekeytoensuringhomeandbusinessownersandlandlordshavesufficientincentivetotakeadvantageofthescheme.

On-bill financing arrangements, such as Environmental Upgrade Agreements (EUA), provide an affordable mechanism for funding integrated efficiency and renewable energy upgrades.

During2014,apartnershipbetweentheCityofDarebin,EnergyMattersandMorelandEnergyFoundationcoordinatedtheinstallationofalmost300solarPVsystemsontheroofsoflow-income(pensioner)householdsinMelbourne’snorth.

DarebinCouncilcoveredtheupfrontcostoftheinstallations,whichhouseholdsarethenpayingbackthroughtheirratespaymentsovera10yearperiod.Therepaymentshavebeenstructuredsothathouseholdswillsavemoreeachyearontheirelectricitybillthantheamountbywhichtheirratesareincreased,sothattheystarttofinanciallybenefitassoonastheinstallationiscomplete.64

Box 2. Darebin Solar $aver program

Targeted assistance for low-income landlordsInconcertwithintroducingminimumrentalstandards,governmentneedstotakestepstoprotecttenantsfromunreasonablerentincreasesandevictions.ProvisionswithintheResidential Tenancies Act(VictorianPropertyFundandtheResidentialTenanciesFund)couldbeusedtoprovidemeans-testedgrantsorloanstoenablelow-incomelandlordstomeetminimumstandards.LoansprovidedundertheResidentialTenanciesFundcouldincludetermsandconditionsprotectingtenantsfromunreasonablerentrises(whichdon’treflectthecostsofupgrade)andevictions.

64MorelandEnergyFoundationat:http://www.mefl.com.au/news-and-events/item/1146-darebin-solar-aver.html

Step 3. Create a culture of efficiency and provide relevant informationMostVictoriansareunawareofhowtheirhomesperform,howmuchmoneytheycouldsavebyinvestinginefficiency,andwhichmeasureswilldeliverthemostcost-effectiveimprovements.Whileenergyliteracyisgenerallylow,investinginretrofittingwillremainalowpriorityformostbusyhouseholds.

Amasspubliceducationpushinthetraditionofsuccessfulroadsafety,waterconservationandpublichealthcampaignsisneededtobuildpublicsupportforefficiencyandimprovedstandards.Inparticular,itwillbeimportanttoclearlycommunicatetheimplicationsofimprovedstandardstohomeandbusinessowners,landlordsandtherealestatesector,soastominimiseconfusionandensureallpropertyownersareawareoftheirresponsibilitiesandtheassistanceavailable.

Masspubliceducationtoachieveawidespreadshiftinpublicsentimentdoesn’tleadtoactiononitsown.Suchacampaignneedstobecomplementedbyaccessiblelocalservicestoprovidepropertyownerswithtechnicaladviceorfinancialassistance.

Victoria’slocalgovernment,environment,communityandenergyefficiencysectorshaveawealthofexperienceindeliveringadviceandretrofitservices,andengagingdiversegroupsinefficiency.Governmentshouldworkwiththesetrusted,localorganisationstofundinformationandadviceservicesacrossthestate,deliveringonline,face-to-faceandphoneadviceaboutretrofitoptionsandreferraltoassessment,financeandinstallationservices.

Step 4. Deliver targeted programs for those most in needThefirstthreesteps–Standards,FinanceandInformation–willeffectivelyaddressthebarriershinderingmostpropertyownersfrominvestinginefficiencyimprovements.

However,asignificantnumberofdisadvantagedandlow-incomeVictorianhouseholdsfaceadditionalbarrierstoengagingwithefficiencyprograms,andneedtargetedinterventionsfromgovernmenttoensuretheydon’tmissout.

Thesehouseholdsincludepublicandcommunityhousingtenants,concessioncardholders,theelderly,utilitiesretailerhardshipprogramparticipants(oftenlargerfamilieswithlargemortgagesandhighenergyuse),energy-rationinghouseholds,AboriginalVictorians,culturallyandlinguisticallydiversecommunities,andpeoplelivingwithdisabilities.

Effectiveparticipationbythesegroupsinenergyefficiencyprogramsreliesonproactivetargetingandrecruitmentthroughexistingtrustedrelationshipswithestablishedlocalgovernmentandsocialsectorserviceproviders.

Fund a Victorian low-income energy efficiency programThereisalreadyasolidfoundationofexperienceandexpertiseinengagingwithdiversegroupsinVictoria,includingprogramsfundedbythefederalgovernment’sLow-IncomeEnergyEfficiencyProgram(LIEEP),whichisduetoendinJune2016.

Bytheircompletionin2016,VictorianLIEEPprojectswillhavereachedalmost15,000Victorianhouseholdsinbothmetropolitanandregionalareas.Engagementmethodsrangefromeducationalworkshops,totrainingparticipants,todeliveringhomeenergyassessments,toinstallationofminorandmajorretrofits.

TheimminentclosureoftheLIEEPschemeriskslosingthevaluableexpertiseandon-groundrelationshipswhicharecriticaltotheeffective

Many disadvantaged and low-income Victorian households face additional barriers to engaging with efficiency programs, and need targeted interventions from government to ensure they don’t miss out.

Right: EnvironmentVictoria’sFuturePoweredFamiliesprojectusesapeer-to-peermodeltodeliverenergyandwaterefficiencytrainingtolow-incomeparentsfrommigrantandrefugeebackgrounds.

deliveryofprogramsto‘hardtoreach’segmentsofthecommunity.SuchalosswouldjeopardisethesuccessfuldeliveryofsimilarprogramsinVictoriainfuture.

ThereisasignificantopportunityfortheVictoriangovernmenttobuildonthesolidfoundationcreatedbyLIEEP,byfundingacomprehensivelow-incomeenergyefficiencyprogramforVictoriaencompassingbehaviourchange,buildingupgradeandappliancereplacementassistance.

ThecostofdeliveringaVictorianLIEEPschemeofasimilarscaletocurrentprogramsoperatinginVictoria,butoverafouryearperiodinsteadoftwotothreeyearprojects,wouldbearound$32million.

Partner with utility retailers to co-finance retrofits for Hardship Program participantsVictorianutilitiesretailershaveasignificantandgrowingproblemwithcustomersexperiencingfinancialhardshipwhoareunabletopaytheirbills.Inparticular,customersonpaymentplanswhicharebelowthecostoftheirbillsarebuildingupdebttheyhavelittlechanceofpayingoff.65

Withoutinterventiontoincreasethesecustomers’capacitytopay(throughincreasedassistance),and/ortoreduceconsumption(throughretrofittingandappliancereplacement),energyhardshipanddisconnectionratesarelikelytocontinuetoworsen.

Whileprovidingassistanceforcustomersintemporaryhardshipisanappropriateroleforretailers,tacklingchronicunaffordabilityandtheunderlyingcausesofhighusageshouldbearesponsibilitysharedwithgovernment.Furthermore,giventhatasignificantproportionofhardshipcustomersliveinprivateorpublicrentalhousing,opportunitiesforretailerstoactalonearelimited.

Governmentshouldexploreopportunitiesforpartneringwithretailerstoco-financecomprehensiveefficiencyandrenewableenergyretrofitsforcustomersexperiencinghardship.AnumberofinnovativefundingmodelsarenowbeingimplementedaroundVictoria,e.g.theDarebinSolar$averschemetargetedatlow-incomehomeowners(seeBox2)andtheStKildaCommunityHousingCleanEnergyPackagewhichhasbeendesignedforsocialhousing(seeBox3onpage40).

Thereisanopportunitytobuildonthisworktodesignajointlyfinancedretrofitimplementationmodelwhichissuitedtotheneedsofarangeofcustomerandtenuretypes.

Government should explore opportunities for partnering with retailers to co-finance comprehensive efficiency and renewable energy retrofits for customers experiencing hardship.

65http://aglblog.com.au/2015/09/effective-support-for-vulnerable-households-closing-the-gap-between-capacity-to-pay-and-cost-of-consumption-part-2/

Invest in skills and trainingJobscreatedbytheenergyefficiencyindustryareembeddedacrossawiderangeofexistingindustriesincludingmanufacturing,construction,finance,retailandservices.Furthermore,morethan40percentofwaterandenergyefficiencyjobsarelikelytobesemi-skilled,potentiallyopeningupopportunitiesforunemployedworkers.

Aprogramimplementingcomprehensiveretrofitsshouldincludeopportunitiesforskillstrainingtoensureworkerswithrelevantskillsareavailable.Retrofitprogramscanalsobedesignedtoprovidetrainingandemploymentopportunitiesfordisadvantagedworkers(seeBox3).

Appropriateinvestmentinskillstraining,aswellasarigorousregulatoryregimetoensureworkplacesafety,isalsocriticaltoensurerisksassociatedwithhomeretrofitprograms(suchasexperiencedintheFederalHomeInsulationProgram)areappropriatelymanagedandminimised.66

66AustralianNationalAuditOffice2010,GreenLoansProgram,PerformanceAuditNo.92010-11.

67EnvironmentVictoria2009,Victoria – The Green Jobs State,adaptedfromTable1,p.23.

Retrofit activity

Upgradelighting

Weather-sealing

Ceilinginsulation

Replaceshower-head

Hotwater–electrictosolar

Hotwater–electrictoheatpump

Fridgeupgrade

Dualflushtoilet

Installtapflowcontrollers

Skill needs Labour (hours)

Trained assessor

Unskilled

Semi-skilled

Plumber

Electrician

Unskilled

Plumber

Semi-skilled

Table 2.Workinvolvedandskillsauditforatypicalhomeretrofit.67

Step 5. Upgrade government buildingsTheVictoriangovernmentcandemonstrateleadershipbyinvestinginupgradingitsownbuildingsandoperations.

ThegovernmentshouldreinstateandstrengthenthesuccessfulGreenerGovernmentBuildings(GGB)programwhichwasscrappedbythepreviousCoalitiongovernment.AsofJune2012,theprogramhaddelivered26separateenergyefficiencyprojectscoveringpublicbuildingsandinfrastructureresponsibleformorethan20percentoftheVictoriangovernment’sannualgreenhouseemissions.Outcomesincluded:

• Annualdirectcostsavingsinutilitiesandmaintenancebillsof$32.17millionidentified

• Projectedavoidedcostsavingsof$46.8millionby2020duetoutilitypricerises

• Estimatedavoidedcapitalexpenditureof$81millionoverthenextfourbudgetperiods.68

Inreintroducingtheprogram,governmentshouldreversethede-centralisationoffundingtoindividualdepartmentsandagenciesashasoccurredunderthesubsequentEfficientGovernmentBuildingsprogram,andreinstateTreasury’sroleinfinancingenergysavingprojectsthatdeliversubstantialreturnsoninvestment.

StategovernmentshouldalsoprovideinformationandsupporttoassistlocalgovernmentanduniversitiestoaccesstheGGBframeworktoupgradetheefficiencyoftheirbuildingsandoperations.

Theothersignificantgroupofgovernment-ownedbuildingstockissocial(publicandcommunity)housing.Therearemorethan80,000socialhousingdwellingsinVictoria,ofwhichapproximately65,000arepublichousingdwellings.69

Morethan40percentofpublichousingstockisover30yearsoldandsubstantialmaintenanceisrequiredtoavoidtheclosureofapproximately10,000properties(approximately14percentoftheportfolio)overthenextfouryears.70

WithmanyofVictoria’smostdisadvantagedcitizenslivinginsocialhousing,andwithclimatechangelikelytoexacerbatetheadverseimpactsofpoorqualityhousing,thegovernmenthasadutyofcaretoensureitprovidessafeandaffordableshelterforthosemostinneed,nowandintothefuture.

The Victorian government can demonstrate leadership by investing in UPGRADING its own buildings and operations.

68DepartmentofTreasuryandFinance2012,Greener Government Buildings Performance Report 2009-2012.

69www.aihw.gov.au/housing-assistance/haa/2015social-housing-dwellings/

70VictorianAuditorGeneral’sOfficeMarch2012Access to Public Housing.

StKildaCommunityHousinghasrecentlypartneredwithEnergyforthePeopletotransition20buildings(337roominghouseunits)tozeronetemissionsoveratwo-yearperiod.Theprojectisdesignedtobecash-flowpositivefromthefirstyear,andincludesamorecompetitiveretailtariff,installationofupto150kWofsolarplusbatterystorage,energymanagementtechnologies,LEDlightingandhotwaterupgradesforspaceheatingandshowerfacilities.Italsoincludesacompletetransitionawayfromnaturalgas.

Thepackageisexpectedtosavemorethan$900,000over20years,theretainedfundingbeinginvestedinloweringcostsandprovidingeducationandtrainingopportunitiesforsocialhousingtenantsfor20-plusyears(thelifeofthesolarpanels).Anadditional$30,000perannumwillbesavedthroughthenewretailtariff.71

box 3. St Kilda Community Housing Clean Energy Package

71http://energyforthepeople.com.au/content/st-kilda-community-housing-transition-zero#sthash.9h9TfmCe.dpuf

GovernmentshouldsetagoaltoupgradeVictoria’sentirepublichousingstockby2025.Thiswouldrequire:

• IncreasingtheOfficeofHousingbudgettosupportthedeliveryofacomprehensiveauditandretrofitprogramtoaminimumof10percentofpublichousingdwellingsperyear.Thiscouldbedeliveredinconjunctionwithexistingassetmanagementandmaintenance(includingre-lettingupgrades).Asthecurrentrateofrenovationisapproximately2000propertiesperyear,thiswouldrepresentafourfoldincrease.

• Raisingtheperformancestandardfornewbuildingsto8Starimmediatelytoensurethislong-livedbuildingstockmeetstheneedsofthefuture.

• Reformingtheappliancereplacementpolicytorequireappliancestomeetanefficiencystandardirrespectiveoffueltype(forexample,duetotechnologicalchangeelectricreversecycleheaters/coolersareinmanycasesnowmoreefficientthangasheaters).

TheVictoriangovernmentshouldalsosupportcommunityhousingoperatorstoaccessinformation,adviceandfinancetoimplementcomprehensiveefficiencyandrenewableenergyupgrades.

the government has a duty of care to provide safe and affordable shelter for those most in need.

Figure 8.Energysavingsopportunitiesincommercialbuildingsretrofits,Australia.74

Step 6. Drive improvements in non-residential buildingsCommercialelectricityuseisresponsiblefornearlyhalfofAustralia’stotalemissionsfromthebuildingssector.Significantopportunitiesexistforimprovingtheenergyandwaterefficiencyofnon-residentialbuildingsacrossAustralia(Figure8) andVictoria, deliveringsubstantialcostsavingsandemissionreductions.72

ThemajorityofimprovementachievedinAustraliancommercialbuildingsoverthelast10yearshasoccurredinlargeoffices,consistentwiththegreaterpolicyattentionthissectorhasreceivedtodate.73 However,significantopportunitiesavailableinsmallermid-tierofficeandretailbuildingshavereceivedlessattention.

72ClimateWorks2010,Australian Carbon Trust Report: Commercial building emission reduction opportunities;SustainabilityVictoria2013,The Next Wave: Retrofitting Victoria’s office buildings.

73ClimateWorks2013,Tracking progress towards a low carbon economy: Buildings.

74 Ibid.

75SustainabilityVictoria,www.sustainability.vic.gov.au/~/media/resources/documents/services%20and%20advice/business/srsb%20eeob/srsb%20eeob%20case%20studies/srsb%20eeob%20case%20study%20pixel.pdf

The Pixel Building in Carlton (PICTURED BELOW) is the first carbon and water-neutral office building of its kind in Australia, utilising energy and water efficiency measures, renewable energy, rainwater harvesting and greywater treatment and re-use.75

Inconsultationwithindustry,EnvironmentVictoriahasidentifiedthefollowingrecommendationsforthissector.TheVictoriangovernmentshoulddevelopa10yearplanforupgradingthelargenumberoflowerquality‘mid-tier’officeandretailbuildings.Astagedapproachbasedonactionresearchandstakeholdercollaborationcouldbeginbyintroducinganincentiveprogramin2016-17,potentiallybasedondifferentialcouncilrates.Thiswouldbefollowedbytheintroductionofminimumleasestandardsin2019-20,complementedbyaccesstoaffordablefinance.

Thereisalsoaneedforastatemandatoryefficiencyschemecoveringlargeenergyandwateruserstobereinstated.EPA’sEnvironmentandResourceEfficiencyPlans(EREP)program,whichwasclosedbytheCoalitiongovernmentin2013,requiredlargeenergyandwater-usingsitestoidentifyandimplementresourceefficiencyactions.

Over270commercialandindustrialsitesparticipatedintheEREPprogramfromadiverserangeofindustrysectorsincludingmanufacturingsites,hospitals,retailcentresandsportingfacilities.Priortoclosureitwasexpectedtosaveover7000terajoulesofenergy,7500megalitresofwater,100,000tonnesofsolidwaste,and$120millionperyear.76

The Victorian government should develop a 10-year plan for upgrading the large number of lower quality ‘mid-tier’ office and retail buildings.

76www.epa.vic.gov.au/our-work/programs/past-programs/erep-program

SeveralVictorianregionsarefacingthetwinchallengesofeconomictransformationtriggeredbythedeclineofkeyindustries,andentrenchedsocio-economicdisadvantage.Investmentinacomprehensiveretrofitprogramfortheseregionscouldstimulateeconomicactivityandjobsgrowth,whilehelpingtoeasecostoflivingpressuresforvulnerablehouseholds.

Governmentshouldworkwithkeygroupsineachregion,includinglocalgovernment,thecommunitysector,unions,retailersandlargeemployerstodesignacomprehensivehouseholdretrofitprogramwiththetwinaimsofboostinglocaleconomicactivity,andimprovingtheaffordabilityandliveabilityofthehomesoftheregion’smostvulnerablecitizens.

Programsandinvestmentcouldbetargetedatpublichousingtenants,concessioncardholders,retailerhardshipprogramparticipants,thelong-termunemployedandthosefacingredundancy.Opportunitiesforattractingrenewableenergyinvestment,includingsupportforcommunitysolarprojectsandtheestablishmentofmini-grids,shouldalsobeexplored.

Whilethissectionfocusesongeographiccommunitiesasanexampleofhowretrofittingcouldachievemultiplebenefits,thereareequallyothercommunitiesofneedacrossthestate,includingtheelderlyandthosewithchronichealthconditions,wheretargetedgovernmentinvestmentcoulddeliversignificanteconomic,socialandhealthbenefitstoVictoria.

Geelong Geelonghasbeenhithardbythelossorimminentclosureofkeyindustriesinthelastcoupleofyears.ThreehundredjobswerelostwhenQantascloseditsAvalonmaintenancefacilityinAvalon,another800wentwhenAlcoashutitsPointHenryoperations,andafurther500jobswillgowhenFordclosesitsdoorsinlate2016.Otherbigemployerssuch

06CASE STUDY: RETROFITTING FOR VULNERABLE REGIONS

asTargetandBoralhavealsoshedstaff,andallofthesedirectjoblosseshavewiderimpactsonjobsandbusinessesdownthesupplychain.

TheimpactofthesejoblossesiscompoundedbyGeelong’sstatusasarelativelydisadvantagedcommunity.Unemploymentiscurrentlysixpercent,whileyouthunemploymentsitsat19.4percent.CorioiswithinthetopsixmostdisadvantagedpostcodesinVictoria,andBarwon-WesternDistrictisthethirdmosteconomicallyvulnerableregioninAustralia.77

ClimateWorks’Low Carbon Growth Plan for Geelongidentifiedbuildingefficiencyupgradesasofferingsignificantcost-effectiveopportunitiesforreducingGeelong’sgreenhouseemissions,aswellasstimulatingeconomicactivity.

Figure 9.ShareoftotalemissionsreductionopportunitiesbysectorinGeelong,2015.78

77www.enterprisegeelong.com.au/unemployment-rate-data;DroppingOfftheEdgeatwww.dote.org.au/findings/victoria/;Circelli,MandStanwick,J2014,Economic vulnerability in Australia 2002-12,NationalCentreforVocationalEducationalResearch.

78ClimateWorks2015,Low Carbon Growth Plan for Greater Geelong 2015 Update,adaptedfrom2015graphonp.6.

TheGeelongRegionInnovationandInvestmentFund(GRIIF)hasbeenestablishedasa$29.5milliongrantsprogramfocusedonencouraginginvestmentinnewbusinessopportunitiesandjobsgrowth,inrecognitionoftheeconomicandsocialimpactofFord’sexit.AcomprehensiveretrofitprogramforvulnerablehouseholdsshouldbeconsideredapriorityforsupportunderthisFund.

Melbourne’s Northern suburbsMelbourne’snorthernsuburbswillalsobehithardbyFord’sexit,withtheclosureofitsBroadmeadowsplantresultingininthelossof650jobs.79Afurther700full-timeandpart-timejobsaresettogowhenWoolworthsrelocatesitsHumedistributioncentre,whilearaftofsmallermanufacturingbusinessesinMelbourne’snorthsuchasBettaFoodscontinuetoshedstaff.

Melbourne’snorthisalsoahotspotofsocio-economicdisadvantage,withanunemploymentrateof7.2percentandayouthunemploymentrate of 14.7 percent.80Threenorthernsuburbspostcodes–Broadmeadows,CoolarooandCampbellfield–arewithinthetop12mostdisadvantagedpostcodesinVictoria.81

AMelbourne’sNorthFordResponseJointTaskforcehasbeenformedtodeveloparegionalstrategytominimisetheimpactoftheFordclosureontheregionaleconomyandgeneratenewjobs.A$24.5millionMelbourne’sNorthInnovationandInvestmentFundhasbeenestablishedto“supportinnovativejobcreationprojectsthatstrengthenanddiversifytheregionaleconomyandemploymentbase”.82

Implementingaregionalhomeretrofitprogramwithaparticularfocusonlow-incomeanddisadvantagedhouseholdsshouldbeconsideredapriorityforinvestmentfromthisFund.

Latrobe ValleyIfVictoriaistomeetthechallengeofreducinggreenhouseemissionsandtransitioningtoalow-emissionseconomyinanorderlymannerwhichsharesthecostsfairly,wemustinvestinneweconomicopportunitiesforcoal-dependentcommunitiessuchastheLatrobeValley.

TheLatrobeValleyisalreadyoneofVictoria’smostdisadvantagedandeconomicallyvulnerableregions,andinmanywaysisstillrecoveringfromtheimpactsofthepoorlymanagedelectricitysectorprivatisationprocessofthe1990s.Theunemploymentrateiscurrently5.4percent,whileMorwellandMoearewithinthetop14mostdisadvantaged

CHAPTER 06CASE STUDY: RETROFITTING FOR VULNERABLE REGIONS

79http://www.abc.net.au/news/2013-05-23/ford-to-close-geelong-and-broadmeadows-plants/4707960

80http://vcoss.org.au/blog/vcoss-snapshot-youth-unemployment-in-victoria-and-northern-metro/,Table2andTable3

81DroppingOfftheEdge,www.dote.org.au/findings/victoria/

82www.rdv.vic.gov.au/regional-development-australia/northern-melbourne/media-releases/minimising-the-economic-effects-of-the-ford-closure

postcodesinVictoria.TheLatrobeValleyalsohasoneofthehighestratesoflungcancerandcardiovasculardiseaseinVictoria–asituationwhichmayhavebeensignificantlyexacerbatedbythe2014Hazelwoodminefirewhichblanketedthecommunitywithtoxicfumesformorethanamonth.83

Consistentwithotherstudies,theClimateWorksLowCarbonGrowthPlanforGippslandidentifiedimprovingbuildingefficiencyasofferingsignificantcost-effectiveopportunitiesforcuttingemissionsandboostingeconomicactivity.ItfoundthatGippsland’shouseholdscouldsave$22.9millioneachyearbyretrofittingtheirhomestoimproveenergyefficiency,buildingmoreefficientnewhomesorchoosingnewcarsthatconsumelessfuel.

Figure 10.LowCarbonGrowthPlanforGippsland,MarginalAbatementCostCurve.84

83Teague,JCatfordandSPetering3September2014,Hazelwood Mine Fire Inquiry Report 2014,HazelwoodMineFireInquiry.

84ClimateWorks2011,Low Carbon Growth Plan for Gippsland.

AstheAndrewsGovernmentapproachestheendofitsfirstyearinoffice,therehavebeenencouragingsignsthatitappreciatesthemyriadbenefitsthatinvestmentinefficiencycandeliverforVictoria’speople,environmentandeconomy.

TheenergyefficiencyandproductivitystatementSaving Energy, Growing JobsreleasedinJune2015articulatedavisionfor“amoreefficient,productiveandresilientstate”,andamoredetailedstrategyhasbeenpromised.IncreasedVictorianEnergyEfficiencyTargetsto2020havebeenannounced,whileprocessestosetaVictorianRenewableEnergyTargetanddeveloparenewableenergyactionplanareunderway.

However,thetasknowistosetambitiousgoalswhichareunderpinnedbysufficientfundingandpolicyreformtoensuredelivery.

AsweheadtowardstheParisclimatesummitinlate2015,theAndrewsGovernmenthasanopportunitytodemonstrateitunderstandsthescaleofthechallengesweface,andispreparedtotakeaction.Anycrediblestrategytobothmitigateandadapttoclimatechangeandrapidlytransitiontorenewableenergywillhaveafocusonwaterandenergyefficiency.

Efficiency,particularlyimprovingthequalityofourbuildingstock,isalsofundamentaltodeliveringonothercorecommitmentsmadebytheAndrewsGovernmentpriortothe2014election–growingjobs,enhancinghealthandwellbeing,andcreatingliveable,inclusiveandsustainablecommunities.85

Victoriacouldachieveanefficiencytransformationwithin10years.ButitwilltakeasustainedcommitmentfromgovernmenttoinvestinmeaningfulassistanceforVictoria’smostvulnerablehouseholds,whilecreatingastablepolicyenvironmentwhichencouragesprivateinvestmentintherestofourbuildingstock.

07CONCLUSION

85VictorianLabor2014,www.viclabor.com.au/wp-content/uploads/2014/05/Victorian-Labor-Platform-2014.pdf

Overthecomingmonthsandyears,EnvironmentVictoriawilltracktheprogressoftheAndrewsGovernmentandfuturestategovernmentsagainstthesixstepstoefficiencyleadershipwehaveoutlinedinthisreport.

DeliveringonthisagendawouldseeVictoriareclaimitsleadershipstatusandsetusonapathtowardsgreatersocialequity,economicprosperityandenvironmentalsustainability.Butthereisnomoretimetowaste–deliveryneedstostartnow.

08APPENDICES

Appendix 1. Home retrofit costs and savingsHow do Victorian homes use energy?TheaverageVictorianhouseholdspendsaround$2800onenergybillseveryyear,withmorethanathirdofcostsgoingonheating(predominantlygas)alone.86

Householdenergyuseisinfluencedby:

• Thequalityofthebuildingshell(thermalperformance)

• Theefficiencyoflightingandappliances,particularlyspacewaterheating

• Behaviour,orhowweuselightingandappliances.

What do household upgrades cost?TheaverageVictorianhomebuiltbefore2005averageslessthan2Stars(1.81)intermsofenergyratingperformance.ArecentSustainabilityVictoriainvestigationofretrofitoptionsandcost-effectivenessacross60pre-2005homesinVictoriaconcludedthatanimprovementof3.69Starscouldbeachievedthroughbuildingshellupgradesalone(excludingdouble-glazing)atacostof$2570per1starincreaseinperformance(seeTable3).

Incorporatinglightingandapplianceupgradesshouldlowercostsfurtheraslightingandapplianceupgradesaremorecost-effectiveoverallthanbuildingshellupgrades.

And,asthecostofrenewableenergycontinuestodeclinewhilegaspriceshaveriseninrecentyears,goinggas-freeandmakinghomes‘zeronetemissions’throughacombinationofefficientappliances(e.g.reversecycleair-conditionersusedforbothheatingandcooling),efficiencymeasuresandrenewableenergyisnowarealisticoption.87

86SustainabilityVictoria2014,Household Energy Report.

87BeyondZeroEmissions2013,Zero Carbon Australia Buildings Plan,www.bze.org.au/buildings

Itisimportanttonotethatthestudyfoundawidediversityenergysavingsachievedindifferenthouses,andthatoccupantbehaviourplayedasignificantrole.Hence,undertakingacomprehensiveassessmenttodeterminethemostappropriatemixofmeasuresandeducatehouseholdersaboutenergyandwater-savingbehaviourislikelytodeliverthemostcost-effectiveoutcomes.

Furthermore,takingtheopportunitytoincorporateenergyandwater-savingmeasuresaspartofrenovationscandrivecostsdownevenfurther.About20percentofhomesarerenovatedeachyear,butseveralkeyefficiencyopportunitiesareroutinelymissed,includingimprovinginsulation,draught-sealing,andchoosingefficientwindowsanddoors,lightingandappliances.

Measure Star increase

Gas Elec Total Av. Cost ($) Av. Saving ($/yr)

Payback (yrs)

Draught-sealing 0.69 7.942 225 8.167 $1,037 $157 6.6

Ceilinginsulation(easy)

0.84 8.210 277 8.487 $1,130 $165 6.8

Ceilinginsulation(difficult)

1.14 4.891 204 5.095 $1,119 $102 11.0

Wallinsulation 1.02 5.561 136 5.697 $4,167 $108 38.6

Drapesandpelmets 0.58 2.209 54 2.263 $2,036 $43 38.6

Av. Energy saving (MJ/yr)

Table 3.Averagecostsandenergysavingsformodelledbuildingshellupgrades.88

(Upgrademeasuresmodelledappliedinaspecificorderandcostedatcommercialrates.Changingtheordercouldaffecttheoutcomes.)

88SustainabilityVictoria2014,Household Energy Report,adaptedfromTable3,p.10.

How much can a retrofitted home save in bills?TheSustainabilityVictoriastudyfoundthatanefficienthouseholdcouldsavearound40percentofanaveragehousehold’senergycost.Applyingallpracticalenergyefficiencyupgrademeasures(buildingshell,lightingandapplianceupgrades)couldachieveannualaveragesavingsof:

• 35,800MJofenergy

• $990onenergybills

• 3.4tonnesofgreenhousegases.

Furthermore,forhomesinVictoriawhichalreadyhaveanefficientreverse-cycleair-conditionerinstalled,usingthisunitforheatinginsteadofgascouldachievesavingsof$658ayear.89Whenpairedwithrooftopsolar,‘fuel-switching’cancontributetogreenhouseemissionreductionsaswellascostsavings.

Appendix 2. Efficiency and jobsEnergyefficiencyinvestmentcreatesjobsintwoways:

• Asaconsequenceofdirectinvestmentduringprogramimplementation(i.e.manufacturing,tradesandservicesresultingfromone-offworktoretrofit)

• Asaconsequenceofmoneysavedfromenergybillsbeingavailableforspendinginotherpartsoftheeconomy.90

ThisanalysisestimatesthatachievingthegoalofVictoria’shousingstockmeetinga5Star,100L/p/dayenergyandwaterefficiencystandardby2025(asoutlinedintheOne Million Homes 2025 Roadmap),91wouldsupport:

• between7,040and12,800jobs(gross)duringeachyearofthe10-yearprogram.(‘Gross’jobfiguresdonotaccountforjobsmovingfromotherpartsoftheeconomy);and

• 8,500ongoingjobs(net)asaconsequenceofredirectedhouseholdsavings.(‘Net’jobfiguresrepresenttheeffectofredirectingspendingawayfromtherelativelylessjobs-intensiveutilitiessectortotherelativelymorejobs-intensiveoveralleconomy.)

CHAPTER 08APPENDICES

89Forcey,T.2015,Switching Off Gas,MelbourneEnergyInstitute.

90Andersonet.al2014,Assessing National Employment Impacts of Investment in Residential and Commercial Sector Energy Efficiency,PreparedforUSDepartmentofEnergy,PNNL_23402.

91www.onemillionhomes.org.au

How much investment could residential retrofitting stimulate?Victoriahasapproximatelytwomillionresidentialdwellings,80percentofwhichwerebuiltpriorto2005.Thispre-2005housingstockaverages1.8 Stars in terms of performance.92UpgradingVictoria’shousingstocktoanaverage5Star,100L/p/daystandardby2025wouldrequirethesedwellingstobeupgradedbyanaverageof3Stars.

(1)1.6milliondwellingsneedtobeupgradedbyan averageof3Stars.

SustainabilityVictoriaestimatesthata4.3Starincreasecanbeachievedatanaveragecostof$2222perstarviabuildingshellupgradesalone.93 (Particulartypesofupgradescostmoreorlessperstar,butasthemixturerequiredacrossVictoriaisunknownweconsideraflataverageappropriate.)SustainabilityVictoriaalsonotesthatlightingandapplianceupgradesaremorecosteffectiveoverallthanthebuildingshellupgrades.

Weconsideranestimateof$2000perstarconservativelyreflectsthecostofimprovementsusingbuildingshell,lighting,andapplianceupgrades.Thisis10percentlowerthanthecostofbuildingshellupgradesalone.

(2) Improvingaresidentialdwelling’senergyperformancecostsapproximately$2000/star

(3) From(1)and(2):Thepackageofmeasuresoutlinedwouldstimulateinvestmentof:1,600,000x3x$2000=$9.6billion

(4) Over10years:$9.6b/10=$960millionperyear

Thisinvestmentwillbeleveragedfromarangeofsourcesincludinggovernment,homeownersandutilitiesretailersthroughamixofregulation,incentiveandprogrammeasures.

Jobs supported through 10-year implementation phaseInternationalestimatesforthenumberofgrossjobssupportedduringtheinvestmentphaseofenergyefficiencyrangefrom11jobs/US$1millionto20jobs/US$1million,forregionsincludingtheUSA,EUandOECD(SeeTable4).(Australianestimatesarenotavailable.)

Toaccountforinternationaldifferencesinconditions,wehaveconvertedtheproposed(Australian)expendituretotherelevantcurrencyusingtheOECD’slatestpurchasingpowerparityindicators.94 Asenergyefficiencyactivitiesspanarangeofcategories,wehavechosentheeconomy-wide

93SustainabilityVictoria2014,Household Energy Report,Table3,excludingdoubleglazing.

94OECD2011,‘PPPbenchmarking’,availableatstats.oecd.org/Index.aspx?DataSetCode=PPP2011.C.f.Tables1.2,1.12,and2.2.

indicatorineachcase.

BasedontheinternationalstudiespresentedinTable4,theupgradeofVictoria’shousingstockcanbereasonablyexpectedtosupportbetween7000and13,000jobsperyear.Thisisanestimateofgrossjobs,notnetadditionaljobsacrosstheeconomy,andsoatleastsomeofthesejobswouldbedrawnfromelsewhereintheeconomy.However,giventhatmanytradesandservicesrolesassociatedwithretrofitsareloworsemi-skilled,efficiencyinvestmentprovidessignificantscopeforexpandingopportunitiesforunemployedworkers.

Ongoing jobs supported through household savingsOngoingjobsaresupportedbyresourcesfreedupbyhouseholdsavings;moneynotbeingspentonenergybillswillbeavailableforspendingelsewhereintheeconomyandcreateongoingjobsbeyondthelifeofthedirectefficiencyinvestment.

(5)Theaverageannualhouseholdenergybillis$2800

(6)A5Starhomecancutbillsby40percentcomparedwithbusinessasusual100

CHAPTER 08APPENDICES

95Anderson2014,ibid.

96AmericanCouncilforanEnergyEfficientEconomy2011,‘Howdoesenergyefficiencycreatejobs?’,http://aceee.org/sites/default/files/pdf/fact-sheet/ee-job-creation.pdf

97Janssen,R.andD.Staniaszek2012,How many jobs? A survey of the employment impacts of investment in energy efficiency of buildings,EnergyEfficiencyIndustrialForum

98OECD2012,Energy: OECD Green Growth Studies,OECDPublishing,p.75.

99OECD2011,ibid.

101Andersonet.al2014,ibid.

Author For region (A) Jobs/money (B) AUD investment [from (4)]

(C) PPP conversion99

(D) Regional equivalent [(B)/(C)]

(E) Jobs supported [(D)*(A)]

Anderson95 USA 11jobs/USD1m 960million 1.5 640million 7040

ACEEE96 USA 20jobs/USD1m 960million 1.5 640million 12,800

EEIF97 EU 19jobs/EUR1m 960million 2 480million 9120

OECD98 OECD 13jobs/USD1m 960million 1.44 667million 8667

Table 4.Estimatesofgrossjobsupportusinginternationalstudies.

(7)From(5)and(6):Averagehouseholdsavings=$1000peryear

(8)From(1)and(7):Annualconsumerbillenergysavings=$1.6billionperyear

Andersonet.al,(2014)estimatesanetgainof8jobsperUS$1millionofconsumersavings.101

(9)From(8)andTable4(PPPconversion):AU$1,600m/1.5*8=8,533ongoingjobs(net)beyondthelifeofthedirectefficiencyinvestment.

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