Australia

AU-5:Energy Efficiency Opportunities Program (EEO)

Policy Description

The Energy Efficiency Opportunities (EEO) program started in 2005 and encourages large energy-using businesses to improve their energy efficiency by requiring them to identify, evaluate and publicly report on cost effective energy savings opportunities.

Description

The Energy Efficiency Opportunities (EEO) program started in 2005 and encourages large energy-using businesses to improve their energy efficiency by requiring them to identify, evaluate and publicly report on cost effective energy savings opportunities.

Corporations with an annual energy use above 0.5 PJ (*1) are required to participate in the program Electricity generators were initially exempt, but as of 1 July 2011, these activities are now included (*2). The program covers approximately 65% of Australia’s total energy use including approximately 300 corporations from the manufacturing, mining, resource processing, electricity generation, transport and commercial sectors [8] (Status 2013).

Under the program, companies must undertake an energy efficiency assessment using the EEO Assessment Framework to identify cost-effective energy saving opportunities (< 4 year payback). Implementation of the identified opportunities is not mandatory, but publication of the results of the assessment and the company’s response is. Public pressure is intended to affect the extent to which companies implement the identified opportunities.

If/when the energy consumption participation threshold is surpassed, the company must register with the Department of Resources, Energy and Tourism (DRET) and within 18 months of surpassing the threshold, an assessment plan must be submitted. The assessment follows a 5-year cycle, and outlines the corporate structure, current (baseline) energy use and existing energy savings projects, an assessment schedule (how and when assessments will be conducted) and a reporting schedule (how, where, and when the Department and the public will be informed).

Within the first two years of the assessment cycle, either each member of the corporate group scheduled to conduct assessments must complete its first assessment for at least one site, key activity or business unit, or 40% of the group’s energy use must be assessed. At least 80% of the corporation’s total baseline energy use must be assessed (including all sites that use more than 0.5 PJ per year) within the first (5-yr) assessment cycle, and at least 90% must be assessed or re-assessed in the second and subsequent cycles.

The Assessment Framework sets out minimum standards to ensure assessments are rigorous and comprehensive, distinguishing six key elements:

  • Leadership support for the assessment and the improvement of energy use;
  • The involvement of a range of skilled and experienced people, and people with a direct and indirect influence on energy use, during the assessment process;
  • Information and data that is appropriately, comprehensively and accurately measured and analysed;
  • A process to identify, investigate and evaluate energy efficiency opportunities with paybacks of four years or less;
  • Business decision making and planning for opportunities that are to be implemented or investigated further;
  • Communicating the outcomes of the assessment and the business response to senior management, the board and personnel involved.

For each of the 6 key elements, key requirements are defined in the Assessment Framework (19 in total), and the type of evidence required to show compliance is detailed. The outcome of the first assessment must be published within 30 months after passing the participation threshold, followed by annual updates thereafter. Public reports must be readily available to investors, shareholders, other key stakeholders and interested members of the public, e.g. by including them in existing public reports, such as annual, sustainability or financial reports.

Important aims of public reporting are to:

  • Encourage senior managers and company boards to give careful consideration to energy use and energy efficiency opportunities;
  • Provide meaningful information to the market about energy efficiency opportunities identified in assessments, and the participant’s business response;
  • Provide an avenue for participants to demonstrate the responsible and efficient use of energy;
  • Provide a measure of program effectiveness.

Participants must also report to the government on the outcomes of the assessment and the business response, within the first 30 months (2.5 years) of each assessment cycle, and at the end of each assessment cycle. Government reports are more detailed than public reports.

In 2008, the EEO underwent a review and amendments were adopted to streamline energy use reporting with the National Greenhouse and Energy Reporting (NGER) System.

Two types of verification are undertaken. Desktop verification is carried out for all companies in each five-year assessment cycle on the basis of  a questionnaire on the key requirements of the Assessment Framework completed by the companies. A smaller number of companies are then selected for a full verification process, which involves site visits, interviews and a review of documentary evidence (*3). Each year approximately 100-120 corporations are chosen to be subject to a desktop verification, in which corporations are required to submit an online form to allow for an assessment of the non- compliance risk. The results will contribute to the selection of companies to undergo a full verification and site visit.

Formal verifications commenced in early 2010 to ensure companies are complying with the requirements of the legislation. The verification will validate corporations' compliance with EEO legislation (in conducting assessments, identifying opportunities and reporting outcomes), monitor whether a corporation has carried out its assessment in line with the approved Assessment and Reporting Schedule and ensure the company meets the coverage requirements.

 

The Program undergoes a three phase evaluation undertaken at the start, middle and end of the first five-year cycle of the program. The full-cycle evaluation resulted in the government making amendments to the EEO Program that came into effect from June 2013. Some of the amendments made included the following:

  • A new EEO Assessment Framework: the older version was modified to reduce compliance obligations, simplify and streamline requirements and to improve the flexibility for corporationsA new public reporting process that increases flexibility and reduces the information requirements for public reporting for corporations
  • New regulations for the Assessment Plan [9]

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Administrative, Information & Outreach

Position in the Pyramid

About Us

Participation: Mandatory

Period

Start Date: 2006

End Date: 2014

Policy Linkages

Supports Carbon Pricing Mechanism (CPM) Effort Defining
Supported By Clean Energy Finance Corporation (CEFC) funding Supporting Measure
Supported By Clean Technology Program (CTP) Supporting Measure
Supported By Carbon Pricing Mechanism (CPM) Effort Defining

Agencies Responsible

Department of Resources, Energy and Tourism (DRET)
Climate Change Authority

Primary Objective: Energy

Objective

­To encourage large energy-using businesses to increase their energy efficiency by improving the identification, evaluation and implementation of worthwhile energy savings opportunities

Target Group

Businesses with annual energy use >0.5PJ. Electricity generators as of 1 July 2013.

Driver of energy consumption or emissions affected by policy: Knowledge level

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

Approximately 65% of Australia’s total energy use including approximately 300 corporations from the manufacturing, mining, resource processing, electricity generation, transport and commercial sectors [8].

Quantitative Target? no

Progress Monitored? yes

Verification Required? yes

Enforced? yes

Sanctions: Program procedures are aimed at communicating and redressing non-compliance. As a last resort, court proceedings can be started to seek a declaration of non-compliance and a civil penalty order (max AUS$110,000).

Requirements on the Target Group

  • Registration with the Department of Resources, Energy and Tourism
  • Prepare an assessment plan
  • Identify all energy saving measures with payback period < 4 years
  • Report on identified measures and company response to government and public
  • Submit to verification if selected.

Support by Government

  • Provision of information, tools and learning opportunities such as training and seminars to support participants, and Industry Support Officers to assist them (*6)
  • Recognition of achievements of leaders in energy efficiency (in case studies, on workshops, newsletters and government publications)
  • Streamlining reporting requirements with NGERS
  • Financial support measures such as the Clean Technology Program and the Clean Energy Finance Corporation (see AU-3 and AU-4).

Implementation Toolbox

  • Website and newsletter
  • Industry Guidelines
  • Energy saving measures guide
  • Assessment Handbook
  • Electronic template assessment plan
  • Template for government and public reporting
  • Verifiers Handbook
  • Verification Checklist and Information Request Form
  • Case studies
  • FAQs
  • Support for monitoring & reporting under NGERS (see AU-1), including an EEO module in OSCAR (On-line System for Comprehensive Activity Reporting).

Complexity of Implementation

Government

Strong emphasis on organisational and management practices, which is not easy to capture in key performance indicators and measures. Government must assess the company plans and carry out the verification.

Target Group

­Cause of complexity for target group: Strong emphasis on organisational and management practices, which may be rather new and not easy to capture in key performance indicators. Identification of measures and reporting on degree of implementation is required, but implementation of measures is not mandatory.

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions 207 corporations identified 141.9 PJ in energy savings in 2010 (representing 9.8% of corporations total assessed energy, 2.5% of total Australian energy use) Half of the energy savings identified by companies (53%) are in the process of being implemented or have already been implemented. [7]. The program seems to have had effect in raising the awareness of energy efficiency opportunities and in changing corporate culture. It could be more effective in terms of achieving additional energy savings if requirements were imposed on the implementation of identified measures.
Estimated costs/benefits for industry No estimates available. EEO requires identification of measures with payback period less than 4 years, but does not require their implementation. The total financial benefit of the above-mentioned savings for EEO participants is estimated to be AUD 1.2 billion per year [7].
Estimated cost for government not available

References & Footnotes

References

[1] Energy Efficiency Opportunities Program homepage http://www.ret.gov.au/energy/efficiency/eeo/Pages/default.aspx

[2] Energy Efficiency Opportunities Program - regulations http://www.comlaw.gov.au/Series/F2006L01895

[3] Energy Efficiency Opportunities Program - Industry Guidelines, Aug 2011 http://www.ret.gov.au/energy/efficiency/eeo/industry_guidelines/Pages/default.aspx

[4] Energy Efficiency Opportunities Program - Government and Public Reporting templates http://www.ret.gov.au/energy/efficiency/eeo/resmaterial/reporting/Pages/default.aspx

[5] Energy Efficiency Opportunities Program – Resource material http://www.ret.gov.au/energy/efficiency/eeo/resmaterial/Pages/default.aspx

[6] Ogilvey Earth, 2010, Quantitative Research of CEOs/Senior Level Executives Participating in the Energy Efficiency Opportunities Program,

[7] Vickery, 2011, ‘Energy Efficiency Opportunities - Lessons for Policy Pathways’, presentation by L. Vickery, General Manager Industrial Energy Efficiency, Australian Department of Resources, Energy and Tourism to the IEA, Paris – September 2011.

[8] Australian Government (2013). EEO Program. http://energyefficiencyopportunities.gov.au/about-the-eeo-program/about-the-program/

[9] Australian Government (2013). Tools to understand and apply the regulation changes. http://energyefficiencyopportunities.gov.au/templates-and-tools/tools-to-understand-and-apply-the-regulation-changes/

Footnotes

(*1) At corporate group level (operation control as defined in NGERS)

(*2) Only corporations whose main business is the transmission and/or the distribution of natural gas or electricity, and whose total energy use for other activities does not exceed 0.5 PJ in a year will be exempt till June 2013. Medium energy users may participate voluntarily.

(*3) On verification, the program indicates ‘Where corporations are genuinely committed to the program, the approach for verification is to encourage cooperative learning and improvements in conducting effective assessments and publicly reporting on outcomes. However, more stringent mechanisms are available under the legislation to ensure participation in all steps of the program by those corporations which are required to do so.’

(*4) Electricity generation is responsible for 28% of national GHG emissions in Australia.

(*5) Note on monitoring: Participant monitors and reports the identified measures and the company’s response to the government. The government monitors correct registration and reporting, and whether the agreed assessment plan has been followed, but not the implementation of measures. The government report only needs to contain the total amount of energy and cost savings as a result of the company’s responses to the assessments, not for individual measures.

(*6) Each company is assigned an Industry Support Officer (ISO), who acts as a single point of with the government. ISOs review the company’s documentation, respond to any questions of concerns the company may have and informs it of programme changes or new resources. In more recent years, ISOs are allocated to companies in the same industry sector. This arrangement has helped the ISOs to better understand the specific needs of a sector and to share best practices and lessons learned across companies.