Appliance energy ratings get the standard treatment

Parliamentary debates on the Greenhouse and Energy Minimum Standards (GEMS) Bill have been deferred. The Bill was originally scheduled for discussion on Thursday 28 June, with the portfolio Shadow Minister to outline the Coalition’s position. Although the scheme started out as a Labor election promise in 2007, it evolved into a commitment under COAG’s National Strategy on Energy Efficiency to ‘establish national legislation for Minimum Energy Performance Standards (MEPS) and labelling, and over time move to add Greenhouse and Energy Minimum Standards (GEMS)’. This Bill implements that COAG commitment.

Historically, the energy efficiency of appliances has been managed at the state level, primarily through the Equipment Energy Efficiency Program. However, inconsistencies between state laws arose. In response, the Australian Government is harmonising the seven state and territory legislative frameworks, replacing them with one national scheme. This is in line with commitments to the UNFCCC, which requires implementation of national programs that reduce greenhouse gas emissions.

The Australian Government’s commitment is to reduce national greenhouse gas emissions by at least 5% on 2000 levels by 2020 and 80% by 2050. ABARES has estimated that 55% of Australia’s emissions reduction target to 2050 could be met through energy efficiency improvements—a logical choice, but they can be difficult to implement. Some recent attempts at household energy efficiency schemes (Home Insulation Plan, Green Loans Program and proposed Green Start program) have been marred by design and implementation problems.

The GEMS scheme
The GEMS Bill is a framework Bill. It establishes a GEMS Regulator and provides for the appointment of GEMS Inspectors. It requires the Minister to make determinations covering product classes and then for models to be registered under those determinations. These determinations detail standards, test methods, labelling requirements and any other requirements.

Before making a GEMS determination, the Minister must obtain consent from at least two-thirds (i.e. five) of the participating jurisdictions (which currently includes all states and territories). The determination then comes into force 12 months later, unless otherwise specified. If an item is manufactured or imported before a GEMS determination, that item may be sold or supplied indefinitely. However, to avoid suppliers stockpiling obsolete products, the GEMS determination may include a limited grandfathering period beyond which any supply of the relevant item is banned. To manage stockpiling issues and the progress of appliance energy efficiency, the Bill requires companies to provide data on the numbers of imported, exported and manufactured items.

Potential issues
Industry and energy businesses are generally supportive of the intent of the Bill because it simplifies the present situation. Nonetheless there are concerns, such as duplication and confusion from added layers of bureaucracy, required notice periods, costs, and disclosure of sensitive information.

Duplication and confusion
In response to the Draft Bill, many industry groups expressed discontent that the proposed scheme may introduce duplication and create confusion if not properly aligned with existing codes and standards. In particular, there was apprehension that the Minister may be able to override Standards Australia, making a decision without transparency which could exclude industry and the community.

In its response, the Government identified two separate issues: the first relating to transparency, and the second concerning the ability to bypass Standards Australia. The Government addressed transparency by reminding stakeholders that determinations would be by disallowable instruments and that they would be made following a public consultation process. On the second issue, the Government explained that the Minister would have the ability to ‘call up’ existing Standards Australia documents, granting them legal status.

Another concern is the risk of inconsistency between states and territories, despite the fact that the main purpose of the proposed scheme is to rectify this. The Bill explicitly states that state and territory laws may operate concurrently with GEMS, as long as they impose more stringent requirements. There are precedents for states taking unilateral action:
In 2009 the Queensland Government unilaterally adopted higher MEPS levels for some classes of air conditioner, to apply in that state only... In December 2009 the South Australian Government also gazetted requirements for air conditioners to be sold in SA from 1 January 2010, that differ from the nationally agreed program.

Some industry groups have called for determinations to require unanimous agreement.

The potential for the proposed scheme to increase operational costs has also been raised. The Government has indicated that initial fees for registration will range from $250 to $650 and will be reviewed every three years.

Many industry groups have raised concerns over the Bill’s requirement for businesses to provide Government with sales data that could be considered commercially sensitive. The Bill empowers the GEMS Regulator to request such information but also prescribes offences arising from the mishandling of such information. Industry is also concerned that the provision of data will add unreasonable costs.

Notice periods
Since the Draft version, this Bill increases from three to 12 months the notice period for a new GEMS determination to take effect. Some companies say the twelve-month notice period is still not sufficient.

Expanding the scheme
The Explanatory Memorandum notes that the Bill will ‘allow the expansion of energy efficiency regulation in the future to cover a wider range of products’. It could regulate equipment that uses energy other than electricity, such as diesel or petrol generators. Eventually it could also cover products that do not directly use energy but affect energy use, such as windows and insulation. How a window affects energy use is, of course, related not just to the window but to its installation and the overall design of the building. This is why such products have historically been assessed and/or regulated through building codes and holistic rating systems. Putting these matters into GEMS will require further careful planning.


Flagpost is a blog on current issues of interest to members of the Australian Parliament

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