7 Sectoral coverage
Recommendations on which sectors would be covered in considering a national Energy
Savings Initiative are likely to influence the costs and benefits of a scheme and how they are
distributed. This will also influence how any national scheme could meet the design
principles of efficiency, fairness and equity.
This chapter discusses:
7.1

which sectors will be included in the central scenario used by the Working Group in
the regulatory impact analysis;

sector-specific concerns raised by stakeholders in response to the Issues Paper; and

a proposed approach to test scenarios for the treatment of emissions-intensive
trade-exposed (EITE) industries to determine if their exclusion would result in the
loss of significant cost-effective opportunities.
Approach to coverage
Under the Clean Energy Future plan, the Australian Government committed that investigation
of a potential national Energy Savings Initiative would start from a basis of broad coverage
(residential, commercial and industrial). However, the commitment noted that further design
work and consultation should include consideration of sectoral coverage issues.
Broad coverage allows the greatest scope for the market to find and implement the least-cost
energy efficiency improvements to meet the target, which would minimise the cost of a
scheme compared to the likely benefits. This maximises the overall efficiency of a scheme, in
line with the first of the design principles outlined in Chapter 3.
However, the overall costs and benefits of the scheme are only one part of the picture – the
distribution of costs and benefits across and within sectors is also a relevant factor. In light of
the proposed design principles of fairness and equity, there is also cause to consider whether
a scheme can provide all sectors with benefits that are fair when compared to the costs borne
by that sector.
The Working Group’s approach is therefore to start with broad sectoral coverage, with
exclusions considered only where necessary for a scheme to remain fair, equitable and
cost-effective.
When assessing sectoral coverage, there are two separate issues to consider: whether the
sector's energy use would be included in the target base; and whether the sector would be
allowed to carry out accredited energy efficiency activities.
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Generally, a sector should be treated equally under both scenarios – that is if a sector is
captured in the target base of a scheme, that sector should also be eligible to undertake
activities – unless there is a particular reason to depart from this approach. A sector would
therefore have the opportunity to receive direct benefits from a scheme (through carrying out
accredited activities) when it also faces the costs (through being included in the target base).
Discussion of coverage in this chapter thus refers to both the inclusion of a sector in the target
base and accredited activities, unless otherwise specified.
As outlined in Section 6.1, an approach to considering geographic coverage will also be
applied through the regulatory impact analysis. Thus any exclusion of geographical areas,
including specific networks, will be overlaid on sectoral coverage (as well as fuel coverage)
to determine the overall coverage of a possible national Energy Savings Initiative. In this
way, while a sector may be covered by a scheme, some parts of the sector may be considered
for exclusion based on geographical location and some energy use of the sector may be
excluded where a fuel it uses is not covered.
The Issues Paper discussed the definitions and characteristics of commercial, industrial and
residential sectors in Australia. Comments were invited on a range of issues, including:

whether any sectors or sub-sectors could be excluded from coverage;

whether there may be sectoral-specific barriers to the uptake of energy efficiency
improvements;

what potential for energy efficiency improvement exists in each sector; and

whether there are aspects of sectoral coverage in existing schemes that a potential
national Energy Savings Initiative could leverage.
A wide range of stakeholder submissions – including from industry associations, energy
companies, environmental associations and community welfare groups – supported a
national Energy Savings Initiative with a broad sectoral base. Stakeholders provided various
reasons for supporting broad sectoral coverage, including that it would:

ensure the maximum number of opportunities to improve energy efficiency are
available;

keep the cost of potential certificates down;

make it easier to transition from existing schemes with different (and narrower)
sectoral coverage;

most effectively target cross-sectoral barriers; and

result in a greater net benefit to the economy.
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Some submissions raised potential difficulties that would need to be overcome if a national
scheme had broad coverage. These included different set-up costs for participants operating
in jurisdictions with different coverage under existing schemes and the possibility that private
benefits could accrue to one sector while associated costs accrue to another. These issues will
be considered further through the regulatory impact analysis.
For the purposes of the regulatory impact analysis, the Working Group intends to start with a
central scenario that covers the commercial, industrial and residential sectors (allowing for
geographically-based or fuel-based exclusions). A discussion of each of these sectors and
relevant issues raised by stakeholders is provided below.
The costs and benefits of excluding particular sectors will be tested against the central
scenario to determine the overall impact on a national scheme, and on other individual
sectors.
Working Group view: sectoral coverage in the central scenario
For the purposes of the regulatory impact analysis, a central scenario will be established to
test the costs and benefits of a possible national Energy Savings Initiative with broad sectoral
coverage, including the commercial, industrial and residential sectors.
The regulatory impact analysis will also test the costs and benefits of excluding particular
sectors against this scenario.
7.2
Residential sector
The residential sector is included in all existing state schemes in Australia, as well as the
Australian Capital Territory (ACT) scheme, due to commence on 1 January 2013. The
residential sector represents a high proportion of overall implemented activities in state
schemes. Most existing international schemes also include the residential sector.
A range of non-price barriers mean that, for many households, cost-effective energy
efficiency improvements will not be taken up. These barriers include information failures
where households do not have access to sufficient or accurate information about their options,
or split incentives between landlords and tenants. In addition, even where people have access
to sufficient information, they may be overwhelmed by its size and complexity, or may not
have the time to carefully process it.
Stakeholder submissions on the Issues Paper supported this assessment of barriers and also
referred to households not having access to capital to carry out some energy efficiency
measures, as well as the transaction costs in time and effort to source equipment suppliers.
Many stakeholders supported covering the residential sector in a potential national scheme,
suggesting that there are untapped opportunities to improve energy efficiency in this sector,
including in states with existing schemes. Examples given include floor and wall insulation
and glazing upgrades.
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The NESI is an important consideration for the residential building industry given its
potential to create incentives and opportunities for improvements to the more than
8 million existing homes in Australia that were constructed before the introduction of
mandatory energy efficiency regulations.
Housing Industry Association submission
Although generally supportive of a scheme which covered the residential sector, community
welfare organisations raised several issues, in particular the costs and benefits that could be
experienced by vulnerable and low-income households. These issues are discussed in
Chapter 9.
Several other concerns about residential coverage were raised in submissions. A tertiary
education organisation questioned the inclusion of the residential sector in a potential national
Energy Savings Initiative, arguing that residential activities carry a higher overhead of labour
and transport per kilowatt hour of energy saved compared to larger programs in the
commercial and industrial space. Orica noted the potential for the relative scale of activities
in the residential sector to adversely affect energy prices for industrial customers.
The Working Group notes the concerns raised by stakeholders and will consider these
through the regulatory impact analysis. However, based on experience from existing
schemes, the residential sector appears suited to an energy efficiency obligation scheme and a
well-designed scheme can help address barriers to energy efficiency in this sector. There are
a range of opportunities to improve energy efficiency in the sector and these are well suited to
standardised approaches to measurement and verification which would allow the efficient
implementation of activities across the sector. Thus for the purposes of the regulatory impact
analysis, the residential sector will be included in the central scenario.
7.3
Commercial sector
The commercial sector is included in the New South Wales Energy Savings Scheme
(NSW ESS). The Victorian Energy Efficiency Target (VEET) was extended to include the
business sector from 7 December 2011, however large commercial sites captured by the
Victorian Environment Protection Agency (EPA) Environment and Resource Efficiency Plan
(EREP) program are not eligible to participate in the VEET.
A number of international schemes, including in France and Italy, cover the commercial
sector. Conversely, the sector is not included in the South Australian Residential Energy
Efficiency Scheme (SA REES). In the scheme for the ACT, SMEs are to be covered, but not
the entire commercial sector.
While there was generally support from stakeholders for the inclusion of the commercial
sector in a national Energy Savings Initiative, Lend Lease Sustainability Solutions questioned
whether such a scheme would drive energy efficiency improvements in commercial
buildings:
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...there is no evidence anywhere in the world of white certificate schemes working (in
the sense of succeeding) in driving energy efficiency in the non-residential building
sector.....
Therefore to pursue this policy option with respect to the non-residential building
sector would be to miss a huge abatement opportunity for Australia, as well as the
many social and economic benefits that accompany such abatement.
Lend Lease Sustainability Solutions submission
The Refrigerated Warehouse and Transport Association of Australia and the
Tourism & Transport Forum noted that their sub-sectors or operations are currently excluded
from some state-based schemes such as the Victorian VEET, and that this meant they were
not able to access the same opportunities as other commercial entities that participated in
state schemes.
A number of submissions specifically discussed small and medium enterprises (SMEs).73
Some submissions drew on experience with existing schemes to support the inclusion of
SMEs:
Excluding sectors such as the commercial and industrial sector from a scheme reduces
the effectiveness of the scheme. For example, the first 3 years of the VEET scheme
commenced with activities restricted to the residential sector only. Small businesses
were not able to benefit from improvements/activities over the same period. Similar
incentives provided by the NSW ESS (electricity only) within the commercial and
industrial sector are assisting organisations such as Essential Energy to carry out
energy efficiency activities for these small medium enterprises (SME) and
commercial & industrial customers.
Essential Energy submission
While broadly supportive of the inclusion of SMEs and noting the potential to improve
energy efficiency in this sector, some stakeholders noted that SMEs face particular
constraints which would need to be addressed if the commercial sector was covered by a
possible national Energy Savings Initiative. These included a lack of resources, informational
barriers, split incentives and the large variance in scope for energy efficiency improvements
between different SMEs.
The Working Group notes a number of studies that support the availability of cost-effective
energy efficiency improvements in the commercial sector74 as well as experience from
existing schemes which suggests these improvements can be unlocked through an energy
efficiency obligation scheme.
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The Working Group has engaged a consultancy firm to further examine energy efficiency
improvements in the commercial sector in Australia. The data from this work will support
further analysis through the regulatory impact analysis, including modelling the uptake of
energy efficiency improvements in the commercial sector. Unless evidence is obtained to the
contrary, the commercial sector will be included in the central scenario for the purposes of
the regulatory impact analysis.
7.4
Industrial sector
The industrial sector is covered by the NSW ESS, with the energy use of EITE industries
being partially or fully excluded from the target base. The Victorian VEET has been extended
to businesses, however industrial sites captured by the Victorian EREP program are not
eligible to participate in the Victorian VEET. A number of international energy efficiency
obligation schemes also include the industrial sector. The SA REES does not include the
industrial sector, and, while the ACT scheme does not specifically exclude the industrial
sector, its inclusion will depend on the activities approved for eligibility under the scheme.
In their response to the Issues Paper, stakeholders from industry generally advocated for the
exclusion of the sector from a national Energy Savings Initiative, given their relatively large
energy use and the presence of existing measures targeting energy efficiency in the sector.
Large energy users have, obviously, very different needs to smaller energy users and
will not be a market for the energy efficiency products and services that we would
expect the NESI is seeking to promote. As such, we suggest that large users should be
excluded from the NESI altogether... Some of our members have been supportive of
the Energy Efficiency Opportunities program, specifically in the effect that it has had
in raising the profile of energy efficiency in their companies. This would seem to be
the most appropriate approach to energy efficiency improvement in the industrial
sector.
Energy Users Association of Australia submission
Orica suggested that thresholds could be included to determine inclusion or exclusion of
industrial entities:
The industrial sector should be included with rewards and penalties. There should
however be a minimum threshold for inclusion to minimise set up costs to
government. The EEO threshold of 500,000 GJ per year energy use for a company
seems a good start as these companies already should have a good understanding of
energy flow.
Orica submission
Some stakeholders suggested that the industrial sector (along with energy retailers) was more
capable than other sectors of generating certificates:
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Certificates will be generated only in sufficient numbers for trading purposes by large
energy using entities and electricity retailers who aggregate the energy efficiency
improvements for small energy users. The trading scheme should be limited to those
who can provide tradable volumes of certificates. This would include large users and
energy retailers.
Major Energy Users Inc. submission
Industry stakeholders also indicated that barriers to investment in energy efficiency
improvements in the industrial sector include a lack of access to capital, internal competition
for capital, the lower priority placed on energy efficiency as a non-core business issue, and
the high capital cost and inefficiency associated with the early replacement of long-lived
assets.
Views from stakeholders outside the industrial sector were varied. A number of submissions
(for example, Low Carbon Australia Limited, ClimateWorks Australia, Energetics,
Ecovantage, and The Climate Institute) suggested that industrial energy efficiency projects
could account for significant energy and greenhouse gas emissions savings within a national
scheme. ClimateWorks Australia noted that:
Despite the large volume of profitable opportunity that exists in the industrial sector
(23 MtCO2-e), it is not covered by most state schemes... given the significant
opportunity in this sector, and the fact that a carbon price alone is unlikely to be
sufficient to drive the uptake of much of this energy efficiency potential, there is clear
need for additional mechanisms to successfully drive emission reductions in this
sector.
ClimateWorks Australia submission
Other stakeholders raised concerns about the equity of industry sector coverage:
The large scale business sector already has an Energy Efficiency Opportunities
Program. Ordinary electricity consumers should not be burdened with paying for
large scale energy efficiency projects of the large players in mining and
manufacturing. We suggest restricting this program to the residential and community
sector.
Conservation Council of South Australia Submission
Similarly, Ausgrid cautioned that while large industrial customers and mining customers have
the potential to implement a few large-scale energy efficiency initiatives and these may
deliver large volumes of savings at a more effective cost than implementing many small
projects, this:
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... may not meet objectives regarding scheme accessibility and participation and
providing a broader opportunity for a large group of customers to become more
energy efficient and lower their energy expenses.
Ausgrid submission
This view was shared by Energetics:
...were the scheme to include all sectors and all energy types, it could be that the most
cost effective energy saving initiatives are associated with the mining fleets and all
benefits of the NESI go to the large resources companies at the cost of all residential
energy consumers.
Energetics submission
For the purposes of the regulatory impact analysis, the industrial sector will be included in the
central scenario (notwithstanding any geographically-based exclusions – see Section 6.1).
The issues raised by stakeholders regarding the distribution of accredited activities will be
tested through this central scenario and through broader analysis.
Emissions-intensive trade-exposed industries75
Within the industrial sector, emissions-intensive trade-exposed (EITE) industries were raised
by some stakeholders as requiring particular consideration. EITE stakeholders advocated
strongly for the exclusion of EITE industries and large energy users from the target base. This
was based on the view that a possible national Energy Savings Initiative could have a
negative effect on their international competitiveness in a difficult economic climate. For
instance, the Australian Aluminium Council stated:
A national ESI would need to recognise the vulnerability of EITE industries in the
absence of similar cost imposts on global competitors, and put in place measures to
minimise the adverse impacts on local producers. In the AAC’s view this would be
best achieved by removing EITE industries entirely from coverage of a national ESI.
Australian Aluminium Council submission
In addition, EITE industries argued that they have sufficient incentive to carry out energy
efficiency improvements as energy is a significant proportion of their total costs, they will
face a carbon price from 1 July 2012 and they have obligations under other programs such as
the Australian Government’s Energy Efficiency Opportunities (EEO) program which requires
liable entities to identify energy efficiency improvements.
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For example:
There are already strong commercial incentives and internal programs for [large and
very large industrial energy users] to improve the efficiency of energy use at their
operations without additional government policy intervention. A significant
duplication of effort would also result from applying any NESI to large industrial
energy users already participating in the EEO program.
Rio Tinto submission
Other large energy users argued that, while energy efficiency improvements are available,
they are difficult to unlock due to their complexity, capital costs and timeframes required to
implement and realise the benefits.
A number of stakeholders, including ClimateWorks Australia and the
Energy Efficiency Council, advocated that any national scheme should have broad sectoral
coverage. Arguments for inclusion of EITE industries included the need to capture the
least-cost energy efficiency improvements across the economy and the availability of
cost-effective energy efficiency improvements in the industrial sector in general.
EITE industries’ electricity use represents about 21 per cent of national electricity
consumption,76 so exclusion from a potential national Energy Savings Initiative could reduce
the scheme’s target base and affect its overall costs and benefits.
Box 7.1 Coverage of EITE activities or EITE companies?
Under the Clean Energy Future plan, 38 industry activities (covering around 137 businesses)
have initially been identified as being emissions-intensive and trade-exposed and are eligible
for assistance in relation to the carbon price mechanism. This assistance is specifically
applied to EITE activities, rather than to all operations carried out by EITE companies.
The Working Group will consider whether any special treatment of EITE industries should be
applied only to EITE activities (for example, the manufacture of high-purity ethanol) or to the
entire operations of a company (which could also include the manufacture of low-purity
ethanol, which is not an EITE activity, at the same site). This section refers generically to
‘EITE industries’ noting that the distinction between EITE activities and EITE companies
will be considered further through the regulatory impact analysis.
As outlined in Section 7.1, there are two separate issues to consider when discussing
coverage of EITE industries: whether EITE industries’ energy use would be included in the
target base and whether EITE industries would be allowed to carry out accredited energy
efficiency activities.
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Accordingly, there are three approaches for the treatment of EITE industries under a possible
national scheme:

include EITE industries in the target base and allow them to carry out accredited
activities;

exclude EITE industries from both the target base and carrying out accredited
activities, with the option for EITE industries to choose to opt into the scheme (target
base and activities); or

exclude EITE industries from the target base but allow them to carry out accredited
activities on a voluntary basis.
If EITE industries were included in the target-base, they would bear a proportion of the
scheme’s costs. If EITE industries were eligible to carry out accredited activities within a
national scheme, they would have the ability to directly benefit through the revenue stream
generated from certificate creation and through reduced energy consumption. In both
scenarios, EITE industries on shared electricity or gas grids would access indirect shared
benefits, and their participation in the scheme would have an impact on shared benefits for
others. However submissions suggest the potential benefits may be offset by the negative
impact on international competitiveness.
The third approach does not sit neatly with a desire to align costs and benefits with individual
sectors as discussed in Section 7.1. However if the EITE sector was a potential source of
low-cost energy efficiency improvements, such an approach on a voluntary basis may
increase the overall benefits of a scheme while lowering the costs (scheme costs and
potentially energy costs) both for EITE industries and for other energy users.
Existing state schemes have different approaches to the coverage of EITE industries. Under
the NSW ESS, EITE industries' energy use is partially or fully excluded from the target base,
broadly in line with their assistance under the carbon pricing mechanism. EITE sites are,
however, able to carry out accredited activities and create certificates under the Scheme.77
Between the Scheme commencement on 1 July 2009, and 2011, EITE sites have created
around 437,900 certificates for some 14 projects, about 22 per cent of total ESS certificates in
that period.78 Other Australian state schemes are focussed on residential use; the
Victorian VEET only recently expanded to include the business sector.
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Further analysis will be undertaken through the regulatory impact analysis to support a
recommendation about whether EITE industries should be included under a possible national
Energy Savings Initiative. As the first step, the Working Group is investigating whether
sufficient opportunities exist for a national Energy Savings Initiative to significantly improve
energy efficiency in the EITE sector, while taking into account the effect of existing
incentives and requirements such as the EEO program. The results will provide important
inputs into the economic and energy market modelling of a possible national Energy Savings
Initiative by indicating whether the exclusion of EITE industries would have a significant
impact on a national scheme and the extent to which potential decreased international
competitiveness would affect EITE industries.
The central scenario in the regulatory impact analysis will assume that EITE industries are
excluded, both in the target base and as a source of energy efficiency activities. This scenario
will be tested against another in which EITE industries are included so that the level of any
foregone benefits can be examined to determine whether they are significant enough to
warrant further consideration regarding the inclusion of EITE industries. The Working Group
may also test a third option, where EITE industries’ energy use could be excluded from the
target base but EITE industries could be allowed to carry out energy efficiency activities.
Working Group view: coverage of EITE industries
Results of the regulatory impact analysis will be used to support a recommendation on the
treatment of emissions-intensive trade-exposed (EITE) industries under a potential national
Energy Savings Initiative. The central scenario for modelling will exclude EITE industries'
energy use in the target base and EITE industries as a source of energy efficiency activities.
The regulatory impact analysis will also test the impacts of including EITE industries' energy
use in the target base and EITE industries being allowed to carry out energy efficiency
activities. Based on these results, the regulatory impact analysis may also test the impacts on
costs and benefits of allowing EITE industries to undertake activities, but excluding their
energy use from the target base.
These scenarios will take into account existing incentives and programs to improve energy
efficiency such as the Energy Efficiency Opportunities program. The potential impact on
international competitiveness will also be considered in the analysis.
7.5
Energy generation sector
As discussed in Chapter 5, electricity generation converts primary energy sources,79 such as
coal or natural gas, into electricity. While this process can have varying levels of efficiency,
some of the primary energy will always be lost in the conversion process. A generation
business is also a consumer of final energy in its wider operation and secondary services (for
example, lighting the rooms in which its employees work), though some areas of its
operations may be considered to belong to another sector (for example, if a generation
business maintains offices in a commercial office block, this energy end use would be
considered part of the commercial sector, not the generation sector).
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Generators currently face competitive dispatch arrangements which provide an incentive to
improve energy efficiency. The recent extension of the EEO program to cover generators has
increased the likelihood that generators will investigate potential energy efficiency activities.
Furthermore, the carbon price mechanism is expected to motivate carbon intensive generators
to improve their energy efficiency. The existence of several policy measures to encourage
improvements in generator efficiency was raised in the submissions:
It is expected that opportunities for operational energy efficiency for power generators
will be captured by the carbon price. However, additional potential exists in the sector
for capital intensive energy efficiency improvements. Capturing this potential for
emissions reductions is crucial in Australia’s transition to a low carbon future,
however it is likely that these high cost opportunities are better targeted by other
policy instruments than the national ESI.
ClimateWorks Australia submission
Working Group view: inclusion of generators
For the purposes of the regulatory impact analysis, the Working Group considers that a
possible national Energy Savings Initiative would not include the final energy consumption
of generators in the scheme’s target, and that generators would not be eligible to receive
certificates for activities undertaken.
Additional consideration will be given to the treatment of co-generation, tri-generation and
embedded-generation.
7.6
Energy networks
Energy networks, which transport electricity and gas from the source to end users, experience
losses of the energy transported: estimates suggest losses of around one to seven per cent may
be experienced by distribution networks.80 Losses occur though a range of processes, such as
heat loss in wires and transformers, gas leakage and gas used in compression. In operating
their business, energy network companies are also consumers of energy, through activities
such as construction, monitoring and maintenance.
Network companies that participate in the National Energy Market are already obliged to
consider improvements to the efficiency of transporting electricity across their networks.
These obligations occur in conjunction with most network investments, and are derived from
the current Regulatory Investment Test for Transmission (RIT-T) and the proposed
Regulatory Investment Test for Distribution (RIT-D), which form part of the National
Electricity Rules (NER). Furthermore, efficiency improvements are also considered through
the revenue and pricing principles of the NER.81
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The proposed RIT-D requires distribution companies to consider network losses as part of
their assessment of each option under applicable network investments.82 The RIT-D is
intended to ‘increase the efficiency in the development and operation of distribution
networks’.83 The current Chapter 5.6.5B of the NER imposes the same obligation upon
transmission companies. Similarly, electricity networks in the South West Interconnected
System (SWIS) are also required to undertake a regulatory test (that requires the solution to
maximise the net benefit after considering alternative options) when planning major network
augmentations. This requires considering demand side management options and generation
solutions including distributed generation alternatives to network expansion or
reinforcement.84
Beyond these existing requirements, the proposed expansion to the EEO program will require
network businesses to investigate whether cost-effective efficiency improvements can be
made to their networks.85
A number of submissions raised concerns that additional policy intervention could interact
negatively with existing requirements. For example:
[Inclusion of] electricity network sector activities ... is likely to distort our current
regulatory settings which already act to minimise energy losses to the extent that the
economically efficient transportation of the energy is achieved for consumers.
Jemena submission
In an examination of network regulation, the Australian Energy Regulator (AER) found a
lack of evidence that Australian networks have inefficient levels of network losses.86 Should
it come to light in the future that network businesses are affected by interacting market
failures and non-price barriers (like other sectors) that are not overcome by the existing
measures, the Australian Government could consider whether this could be overcome by
including improvements to network efficiency as a source of eligible activity in a future
national Energy Savings Initiative.
Working Group view: inclusion of network businesses
For the purposes of the regulatory impact analysis, the Working Group considers that a
possible national Energy Savings Initiative would not include the final energy consumption
of networks in the scheme’s target, and that network businesses would not be eligible to
receive certificates for activities undertaken.
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73
It should be noted that SMEs can also include small and medium industries, and some of these comments could equally apply to the
industrial sector.
74
ClimateWorks Australia, Australian Carbon Trust Report: Commercial buildings emissions reduction opportunities, 2010; Allen
Consulting Group, The Second Plank Update: A review of the contribution that energy efficiency in the buildings sector can make to
greenhouse gas emissions abatement, Report for the Australian Sustainable Built Environment Council (ASBEC) Climate Change Task
Group, 2010.
75
This section considers the treatment of “EITE industries”, rather than “large energy users”. This reflects that EITE industries could have
limited ability to pass on costs because they are primarily in export competition with countries which may not have an explicit energy
efficiency obligation. The consideration of EITE industries also aligns with mechanisms such as the Renewable Energy Target, the carbon
price mechanism, and the NSW ESS. Further consideration will be given to whether any large energy users fall outside of the definition of
EITE industries (as they are not trade exposed) and if they warrant special consideration with respect to the coverage of a possible national
Energy Savings Initiative.
76
EITE industry consumption is sourced from Department of Climate Change and Energy Efficiency models using actual 2009-10 data for
facilities. The Australian total consumption is sourced from http://www.bree.gov.au/documents/publications/energy/energy-in-australia2012.pdf, p 32.
77
The exempted load represents either 60 or 90 per cent of the total load used by the specified EITE entity at specified locations, as granted
under
a
Ministerial
Order.
New
South
Wales
Energy
Savings
Scheme,
Exemptions,
viewed
on
4
April
2012,
http://www.ess.nsw.gov.au/For_Liable_Entities/Exemptions.
78
New South Wales Energy Savings Scheme, GGAS and ESS Registry - ESS Scheme Totals by Type, viewed on 4 April 2012,
https://www.ggas-registry.nsw.gov.au/searching/totalsbytype.aspx?scheme=ESS; NSW ESS, GGAS and ESS Registry - ESS Accreditation
and Participants, viewed on 15 March 2012, https://www.ggas-registry.nsw.gov.au/searching/totalsbytype.aspx?scheme=ESS
79
Primary energy is the initial fuel, such as coal or natural gas, which is converted or transformed into final energy. Logically, final energy
is the form of energy which end users consume, generally electricity. Total primary energy equals final energy plus any transportation or
conversion losses.
80
Australian Energy Regulator, State of the energy market 2009, pp 156.
81
For example, National Electricity Rules, 2012, Version 49, Rule 6.18.
82
Australian Energy Market Commission, National Electricity Amendment (Distribution Network Planning and Expansion Framework)
Rule 2011: Proposed Rule (marked up), clause 5.6.5CA (c)(4)(vii).
83
Australian Energy Market Commission, National Electricity Amendment (Distribution Network Planning and Expansion Framework)
Rule 2011: Consultation Paper, 2011, p 23.
84
Electricity Networks Access Code 2004 (WA), subchapter 9.1.
Page | 88
85
86
Australian Government, Extension of EEO to electricity and gas transmission and distribution networks: Options Paper, 2012.
Australian Energy Regulator, Final decision: Electricity distribution network service providers – Efficiency benefit sharing scheme, 2008,
pp 14-15. Although not directly discussed by the AER, the ‘Efficiency Benefit Sharing Scheme’ for transmission networks also did not create
additional incentives for transmission network efficiency improvements.
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