Energy

Melbourne, Australia

Melbourne has reduced CO2 emissions by 1.1million by making energy audits mandatory

Summary

Melbourne has been reducing carbon dioxide emissions by 1.1 million tons and saving companies $34 million every year, by simply requiring large greenhouse gas emitters to complete audits and implement sustainable actions that can be paid back in three-years. The focus on economic return has delivered immediate and sustained reductions in consumption and CO2 emissions. Its success means it will be expanded beyond energy to also address water and waste, and will be applied to other companies.

What is it?

The Industry Greenhouse Program is administered by the State EPA and requires over 300 sites with EPA licences that emit large amounts of CO2, to undertake audits, develop action plans, implement their actions with a three-year or less pay-back period, and report on progress. The program is now ending and sites consuming larger amounts of energy, will continue their work through the Environment and Resource Efficiency Plan (EREP) program, commencing in January 2008.

EREP is a new regulatory scheme that will apply to Victoria's largest industrial and commercial users of energy and water, not just licensed sites affected by the Industry Greenhouse Program. Participants will register with the EPA, assess their environmental resource use and waste generation, develop an action plan to improve environmental resource use efficiency and reduce waste disposal and report on implementation of the plan over a period of 8-10 years.

How does it work?

The Industry Greenhouse Program required participants to implement efficiency actions within a three-year or less pay-back period. Sites were required to undertake levels of assessment and implementation depending on the level of their emissions. The program commenced in 2004 and to date has seen $49 million invested by businesses in internal projects that reduce energy, and have been implemented and paid back in an average of less than two years.

Under the program medium to large consumers of energy were required to:

• review their energy bills (electricity, gas, LPG, diesel);
• calculate their energy use and associated greenhouse gas emissions - greenhouse gases produced by an industrial process (such as chemical manufacture or water treatment) should also be calculated;
• conduct an energy audit to Australian standards;
• identify best practice options and determine payback periods;
• prepare an implementation plan for items with a payback of 3 years or less;
• report on implementation and annual emissions as part of annual reporting to EPA.

Industry was assisted in complying with the program by the preparation of a toolkit – the Energy Greenhouse Management Toolkit – this provides information on compliance with the requirements, conversion factors and best practice information.

Significantly, a three-year payback period for energy efficiency requirements has meant that businesses are guaranteed to save money in the medium term. In many instances, payback periods are much shorter, with projects paying for themselves within months.

Businesses applying for an EPA works approval or a new EPA licence have also been required to incorporate energy efficiency best practice improvements, using the three-year payback approach.

Next steps

The Industry Greenhouse Program will be replaced by the Environment and Resource Efficiency Plans (EREP) in January 2008. EREPs is still at the consultation phase.

Environment and Resource Efficiency Plans (EREP)

EREP will apply to all major energy and water consumers above certain consumption thresholds which will be established in future regulations to be released later this year for comment. These consumers will be required to register with EPA, assess their resource use and waste generation, develop an action plan and report on implementation.

An EREP will focus strongly on identifying and pursuing financially beneficial actions for environmental resource use efficiency and will be made up of actions that pay for themselves within three years or less, providing strong financial returns for businesses.

It will also examine options for how “pay-back” is calculated so that a potentially broader range of financial savings across energy, water and waste might be included in the way the economic viability of projects is calculated. Energy projects, for example, may also save money through reducing waste generation and water consumption and it is important that such savings are viewed in an integrated way for both their financial and environmental benefits.

Companies that are already implementing adequate environmental resource use efficiency opportunities will be granted exemption from part of the EREP scheme in recognition of their existing action, which may have been taken through participation in a voluntary program.

EPA Victoria is working with industry and other stakeholders to design the EREP scheme in detail and to develop the regulations that will put EREP into practical effect. It is planned that draft regulations and guidelines be available for comment in August 2007.

CO2 emission reductions

• Industry Greenhouse Program has reduced annual reductions by 1.1 million tons of greenhouse gases, as a result of 300 companies undertaking audits and implementing actions.
• EREP is estimated to exceed the annual reductions of 1.1 million tons of greenhouse gases –already achieved by the Greenhouse Industry Program, because it will apply to a broader range of companies, some of the larger energy consumers not previously captured and include higher targets

Financial savings

• Through the Industry Greenhouse Program, 300 companies have reduced their energy bills by a collective $34 million a year.
• Through EREP companies are expected to reduce their collective energy bills in excess of $34 million a year as savings from addressing energy, water and waste are realised.

Application

The EREPs program is easily applied to other cities, through existing planning laws. In Melbourne’s case there are two general ways to regulate energy use: By setting minimum standards, such as requiring double glazed windows and other sustainable products and technologies; and by requiring set pay-back periods where energy efficiencies need to be made. Through these mechanisms it has been possible to engage companies to reduce their energy consumption.