Embarrassing retreat on VEET for Napthine Government

17 October 2014

Environment Victoria today said the successful Victorian Energy Efficiency Target (VEET) scheme and 2000 workers in the energy savings sector have had a stay of execution with the Napthine Government failing in its efforts to pass legislation to scrap the scheme in parliament this week.

Environment Victoria CEO Mark Wakeham said today:

“The Coalition withdrew their legislation to scrap VEET because they know there is no community support for their efforts to undermine energy efficiency and the more than 2000 jobs the energy efficiency scheme creates.”

“This is an embarrassing defeat for a government that didn’t have the numbers in parliament to scrap a highly successful program.”

“The Premier’s action is clearly designed to park an unpopular decision that puts polluters interests ahead of the public interest until after the state election.”

“The Coalition’s failure to scrap the scheme in parliament this week means that the target will be maintained at 5.4 million tonnes of emissions reductions for 2015.”

“However the Napthine Government has clearly stated that it still intends to scrap the scheme if it is elected in November. This destroys the credibility of the Coalition’s recently released jobs plan.”

“The one thing we know for certain now is that if the Coalition is re-elected, 2000 workers who have been working to weatherproof our homes and businesses, install solar hot water and efficient lighting and manufacture energy saving products will be out of a job in 2015.”

“Environment Victoria has campaigned to save the energy efficiency target for many months now, working deeply in communities like Frankston, Forest Hill and Mordialloc. The Napthine Government’s attacks on energy efficiency are biting in those electorates, and the retreat yesterday shows that they know it.”

“One of the key reasons given by the Coalition for scrapping VEET outlined in their Business Impact Assessment was that VEET is affecting the profitability of Victoria’s existing electricity generators and retailers. This program was always designed to reduce energy demand for good public policy reasons. It is extremely disappointing that the Coalition is acting to protect vested interests with a polluting business model instead of the public interest.”

“Now that we know Coalition’s intentions to destroy the energy efficiency industry it is critical that the ALP and other parties outline their specific policies for energy saving programs, including VEET, if they are elected.”

For comment:

Mark Wakeham, CEO Environment Victoria
0439 700 501

Key facts about the Victorian Energy Efficiency Target:

• Established in 2009 with bipartisan support. The Coalition Government doubled the target to 5.4 million tonnes in 2011. In May 2014, the government announced its intention to close the scheme at the end of 2015 following a transitional year with a target of 2.0 million tonnes, and introduced legislation into parliament to that effect
• As of February 2014, a total of 2.6 million energy-saving products had been installed at 1.4 million separate sites across Victoria. The direct benefit accruing to these households is estimated at $308 over the first five years of the scheme.
• More than 39 percent of VEET installations have occurred outside the Melbourne metropolitan area, and predominantly in low-income areas.
• VEET has achieved 23 million tonnes of greenhouse emission reductions since 2009, or nearly 4 per cent of Victoria’s total emissions over that time.
• VEET has contributed to lower power consumption and lower peak demand, delivering estimated savings of 1852 gigawatt hours, equivalent to 3.7 percent of Victoria’s annual electricity use. During the January 2014 heatwave VEET conservatively contributed 187 mW, without which peak demand would have exceeded the record set in January 2009 in the lead up to the Black Saturday bush fires.
• There are 140 accredited businesses in manufacturing, retail, trades and services, employing an additional 2000 workers as a result of the scheme.
• The Australian Energy Market Commission has calculated the cost of the VEET scheme in 2013/14 to be 0.26 of a cent per kWh. This represents less than 1 per cent of an average electricity bill.
• The Napthine Government has defended its decision to scrap VEET by suggesting the scheme will cost taxpayers $700 million. Unfortunately, the government’s modeling is fatally flawed, according to research commissioned by the Brotherhood of St. Laurence and the industry. The government’s modeling systematically understated the benefits of energy efficiency and overstated the costs, or used out of date numbers.
•  And yet despite this apparent bias, the government’s analysis still came to the conclusion that households would benefit from lower bills if VEET was continued.
• It looks like one of the factors influencing the government’s decision was the potential impact on energy generator profits, with the business impact statement stating “the benefits accrued by consumers participating in the scheme, while outweighing the costs incurred by non-participating consumers, represent a transfer from energy generators to these consumers through a loss of profits.”