Energy efficiency missing component in climate policy compensation package

CEDA attendees were given insight into the ways climate change policies affect households at part three of CEDA's Cost of Carbon series - A Carbon Tax: Implications for Households and Social Equity.

Patricia Faulkner AO, Advisor to the Multi-Party Climate Change Committee and Chair of the Social Inclusion Board, identified that low income households which included pensioners and households on benefit schemes were in the most vulnerable position, many of which are already struggling to pay their electricity bills. 

Highlighting that this sector of the community often did not have the capabilities or capacity to make the necessary changes in their lives to reduce the cost of their bills, she further described their living conditions as contributors to their high electricity bills by painting the image of draughty old homes with low quality energy consuming appliances.

Professor John Thwaites, Chair of Climate Works Australia highlighted that it is likely that electricity prices between 2008 and 2015 would rise by more than 100 per cent.  This is due largely to the increased cost of having to build more electrical networks - poles and wires and generation capacity - to meet peak-time demands. 

He explained that around one million households are currently at a level where they start to experience fuel poverty - where a household is spending more than 10 per cent of their disposable income on energy costs - but that number was set to grow in the next few years as energy costs increased rapidly.

Both Ms Faulkner and Professor Thwaites agreed that energy efficiency should be part of any carbon tax compensation plan and that low income households in particular required targeted assistance through schemes and programs to educate them on energy efficiency. 

Professor Thwaites explained this had a two-fold benefit, firstly because individual household bills would go down, and secondly because demand overall would decrease, reducing demand for new infrastructure which would reduce network costs for the whole community.

The speakers provided examples of successful schemes where electricity retailers and welfare groups worked together to identify households in need of support and also state run schemes, suggesting these proven schemes could be scaled up.

Professor Thwaites described a program in New South Wales, 'Home Power Saving Program' whereby an energy expert goes into a home with a pack of energy saving tools such as shower roses and draft stoppers  at a cost of $280, but delivering savings per household of $230 a year.

He said that such a program and various other current state programs could run well on a large scale if well managed. 

Both speakers agreed that compensation schemes alone would not be sufficient to assist low income households. 

On questioning about whether it would be better for low-income households if no climate policy action was taken, Professor Thwaites said that would mean there was a risk in five to 10 years more rapid action would need to be taken which would have a greater impact on low income households.

Click here for the event audio.