Finkel’s Missed Energy Efficiency Opportunity

Now the dust is settling after the release of the Finkel Review of the Australian energy market, let us hope it’s not the sort of dust that collects in some bureaucratic pigeonhole.

The early signs aren’t good. Statements by some Coalition MPs that Finkel is ‘merely a report to government, not government policy’ are often code for ‘kill this thing at birth’.

And media coverage of the much-anticipated report has concentrated as much on, if not more on, dissension in Coalition ranks – what the Canberra press gallery terms the ‘optics’ – as it has on the contents of the document.

Unfortunately, even what used to be described as the ‘quality’ press, with a couple of notable exceptions, has focussed on the political noise around the report’s release rather than its substance.

Apparently Finkel is as much about the Prime Minister’s security (of tenure) as it is about the security of the National Electricity Market.

Which perhaps is why a glaring omission in the Chief Scientist’s report has been overlooked by commentators – to wit, how can a discussion about the future security of the NEM not have more to say about demand-side activities, in particular energy efficiency?

Admittedly, Dr Finkel’s emphasis on the supply-side isn’t all that surprising. An electrical engineer, he has long advocated nuclear power in Australia (and sure enough, it got a mention at page 109 of his report). Good luck with that …

But his failure to address the immense benefits to be derived from the suite of energy efficiency activities – and not just economic and financial savings, also the energy security benefits that result – is a major opportunity missed.

Finkel does allow, correctly, that ‘consumers are at the heart of the transition’ [in the Australian electricity system] and that ‘more attention should be paid to how we can best reward consumers for demand management … combined with improved energy efficiency’ to help reduce power bills.

However, apart from a couple of passing references to energy efficiency in his recommendations, that’s it. ‘Governments should accelerate the roll out of broader energy efficiency measures …’ he recommends, with no guidance as to which governments and what ‘broader measures’.

Well, yes, but surely the obvious value proposition is for a national energy savings scheme that builds on the excellent foundation of relatively modest existing schemes in Victoria, NSW, South Australia and the ACT.

Such a national scheme would gather in the other jurisdictions of Queensland, Western Australia, Tasmania and the Northern Territory – and, based on the experience in Victoria and NSW in particular, at no net cost.

Achieving energy security (and, by the way, reducing carbon pollution) in our resource-rich country isn’t just about generating more electrons; it’s also about encouraging energy users, especially in the commercial and industrial sectors, to use fewer electrons (not to mention increasingly expensive gas molecules).

If the Australian Government can’t meet the challenge, then let our State Governments continue to pick up the slack.