Repeal of the Energy Efficiency Opportunities Program

10 July 2014

Regulation Impact Statement – Department of Industry

On 15 May 2014, the Minister for Industry and the Parliamentary Secretary to the Prime Minister announced the repeal of the Energy Efficiency Opportunities (EEO) program. The original EEO program required all entities with energy use of greater than 0.5 petajoules (PJ) per year to: audit their energy use; identify opportunities to increase energy efficiency; and provide reports to the government and public. The program was later extended to electricity generators and new developments and expansion projects. The Regulation Impact Statement (RIS) prepared by the Department of Industry notes the EEO program has provided some benefits. These include the implementation of more energy efficient processes in some companies. However, the RIS notes that the rationale for the program is no longer the same since it commenced in 2006. Rising energy prices have driven companies to better consider energy use and the program has successfully embedded energy management practices in many companies. In addition, the RIS notes that the majority of the benefits from the program may accrue early in the assessment process but fall over time after more energy efficiency processes are implemented. In the context of falling benefits, the RIS examines the cost effectiveness of continuing the program, particularly in light of the Government’s strong commitment to removing the red-tape burden on businesses. The RIS compares repealing the scheme to retaining the current regulatory scheme as well as an option to alter the current scheme to be more streamlined, and concludes that repealing the EEO is the preferred option. The RIS estimates that repealing the scheme will save businesses around $17 million annually in compliance costs. The reduction in compliance cost estimates mostly result from removing the administration burden placed on affected businesses to produce and report on energy efficiency assessment plans. A RIS was prepared by the Department of Industry and assessed as complaint with the Australian Government Guide to Regulation and consistent with best practice by the Office of Best Practice Regulation (OBPR).