Poor lose out in energy efficiency cuts

Government plans to slash energy efficiency programs will fall hardest on poorer households and local governments despite sizeable returns on the spending, industry experts say.

The budget effectively axed the Community Energy Efficiency Program and the Low-Income Energy Efficiency Program from the 2013-14 fiscal year, while several other environment-related cuts, such as to the Australian Renewable Energy Agency, will affect later years.

“The Community Energy Efficiency Program was vital to help community organisations and local governments cope with rising energy bills,” Rob Murray-Leach, chief executive of the Energy Efficiency Council, said.

“The government’s decision to cut around $90 million from this program to shore up their budget is another backflip that hurts the vulnerable,” he said.

The low-income energy savings plan, meanwhile, was only set up in the 2012-13 year with funding of $100 million earmarked over four years.

“Those are the people who won’t crank up the radiators when it gets cold because they have no insulation,” Mr Murray-Leach said. “They will just sit there shivering and that will have health effects.”

Both programs came under Gary Gray, the Minister of Resources, Energy and Tourism, following the reshuffle of ministries in March. The larger Clean Technology Investment program, which remained with industry minister Greg Combet, was spared reductions.

“The fact that they kept the $1 billion Clean Technology Investment for business shows that the government understands the value of energy efficiency,” Mr Murray-Leach said. “It’s a poorly thought through decision where the most vulnerable pay the price for the budget cuts.”

Society’s cost

Alan Pears, an energy efficiency expert at RMIT University, said cuts to energy performance schemes were a cost to society, not a saving.

“Many energy efficiency programs have demonstrated large greenhouse gas abatement at negative cost,” Mr Pears said. “That’s without factoring in avoided energy infrastructure costs, health benefits and so on.”

An analysis last year of the benefits of the “Warm Up New Zealand: Heat Smart programme”, for instance, found benefits were about five times the cost.

Rising electricity bills add to the urgency of improving efficiency of use. Residents of California, which had imposed tough performance standards, had the lowest energy bills in the US even though they face high energy prices, Mr Murray-Leach said.

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