Blog | 22nd Oct, 2014

VEET granted a stay of execution

If you had a program that was reducing household energy costs, cutting greenhouse emissions and creating jobs, you’d think any government would be keen to keep it, right?

Wrong. The Napthine government announced in May 2014 that it would wind up the successful Victorian Energy Efficiency Target scheme by the end of 2015.

According to their own business impact assessment, the reason they want to scrap this successful program is because it is undermining the profits of big coal-fired electricity generators by reducing energy demand.

We thought that was an appalling failure of public policy. And with your help we’ve been able to secure a stay of execution for VEET – at least until after the election on November 29.

However if the Napthine government is re-elected it has said it will again attempt to pass legislation in the next Parliament to scrap the scheme.

What is the Victorian Energy Efficiency Target?

The Victorian Energy Efficiency Target scheme has been operating since 2009 to install measures like efficient lighting, draught-sealing, low-flow showerheads and efficient appliances in Victorian homes at little or no up-front cost to the householder.

This has been particularly beneficial for low-income households who struggle to pay the up-front costs of efficiency measures. And as many low-income households rely on government assistance to pay their bills, improving the efficiency of these homes not only lowers the cost of living for disadvantaged people, but would saves the government money from its concessions budget.

The VEET scheme has also been easily meeting its emissions reduction target of 5.4 million tonnnes per year, achieving savings of more than 20 million tonnes since 2009. That’s nearly 4 percent of Victoria’s total emissions over that time.

What’s more, the VEET scheme has also helped to reduce electricity demand in peak periods – like those very hot days when everyone has their air-conditioning on. That’s important because a big driver of rising prices has been the massive investment in ‘poles and wires’ by energy generators in recent years to ensure that they can supply power reliably during peak times.  Lower peak demand means less strain on the system and less need for expensive poles and wires.

It’s estimated that without the contribution made by VEET, peak demand during the January 2014 heatwave would have exceeded the record set in January 2009 in the lead-up to the Black Saturday bushfires.

Why would you scrap it?

The Napthine government has defended its decision to scrap VEET by suggesting the scheme will cost taxpayers $700 million.  Unfortunately, the government’s modeling that produced this figure is fatally flawed.  According to research commissioned by the Brotherhood of St. Laurence and the energy efficiency 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.”

In other words, “we’re prepared to put the interests of the big energy companies ahead of jobs and families.”

The decision to scrap VEET comes on top of the government’s failure to make any progress at all on its 2010 commitment to raise the energy and water efficiency of Victoria’s housing stock to 5 star.

This commitment was a response to a strong cross-sector push by the One Million Homes Alliance of environment, social justice and consumer groups including Environment Victoria for a green makeover of our homes.

The centrepiece of the One Million Homes Plan is a comprehensive retrofit progrma targeting Victoria’s one million lowest income households. Cost-effective implementation of such a program relies on effective, market-based incentive programs like VEET being in place.

The failure to make any progress on improving our housing stock and the decision to scrap VEET (as well as a host of other programs) leaves the Napthine government with no credible policy on energy efficiency as we head towards November’s election.

The Labor Opposition has announced it will reinstate VEET if elected on November 29, but is yet to announce a specific target.  Labor has also committed to raising the performance of Victoria’s homes by ‘One million stars’ but is yet to release any detail on how this promise will be funded and delivered.

In the lead-up to November’s election, people from all over Victoria are saying no to coal mine fires and pollution that’s damaging our health, land, water and industries. And they’re speaking up for renewable energy, liveable housing, secure water, clean jobs and a healthy future.

Will you join us?