Energy efficiency is currently high on the Government’s agenda and how best to encourage businesses and consumers to prioritise sustainability is a key topic of debate. While some feel punitive measures are necessary, it may be advisable to take a leaf out of the US’s book and try rewarding energy efficiency instead.
With the Government’s new scheme for energy efficiency disclosure being introduced on July 1 (as proposed by the Building Energy Efficiency Disclosure Bill 2010), an energy efficiency task group is being established to review the legislation and monitor its establishment.
Currently the scheme applies to commercial office buildings over 2,000m2 and, under the new law, owners of such properties will have to register a Building Energy Efficiency Certificate disclosing the sustainable qualities of the property or face fines of up to $110,000.
The significant penalties raised concerns during the Senate’s Environment, Communications and the Arts Committee’s review of the Bill, which is still being debated. While there is still time to make changes to the proposed law, maybe our Government should consider rewarding incentives rather than punitive ones, like those in place in the US.
Similar US strategies entail providing positive monetary tax incentives for taxpayers who qualify under the related sections of the law. The building scheme provides 1.80 USD per square foot tax incentives for energy efficient buildings and retrofits. In addition, consumers who purchase energy-efficient products or renewable energy systems for their homes may also be eligible for tax credits.
While there are notable differences even between the two property schemes (the US legislation applies to residential as well as commercial buildings, for example), there are some key principles which can be transferred to the Australian scheme.
Using tax credits is an innovative approach, which has been well received in the US and has garnered significant positive feedback. It certainly seems that providing positive incentives to adhere to legislation is more likely to encourage energy efficient solutions.
There are a number of possible reasons for this. Firstly, threatening property owners with fines for non-compliance is more likely to encourage those affected to seek loopholes to avoid the legislation, rather than the proactive and positive approach adopted in the US which encourages business to actively try to meet the legislation’s requirements.
Secondly, when faced with the threat of a fine, building owners can always stick their head in the sand and convince themselves they won’t fall victim to the penalty and therefore not feel the need to adhere. However, the tangible financial rewards available from tax credits provide demonstrable ROI on investments in energy efficiency – a much stronger incentive.
Our Government has a duty to encourage energy efficiency across office buildings and later all buildings, in the most effective manner possible. While ‘carrot versus stick’ has long been debated, the arguments in favour of providing tax incentives for energy efficiency far outweigh those for fines and penalties. While no scheme can be perfect, encouragement and financial reinforcement provides better results that negative repercussions for inaction.
While the Bill is still being debated, the Energy Efficiency Task Group has got a strong opportunity to get these changes made to the legislation before it is in place and I would certainly hope this is the route they take.
Scott Warren joined Complete Technology Integrations (CTI) in 2001 as Director & Technical/Operations. He has driven the company through significant growth including the establishment in 2004 of sister company, mySmart, in which Scott also holds the role of Director. mySmart have completed major projects with organisations including Fairfax Digital and Taroonga Zoo. Prior to joining CTI and mySmart, Scott held the role of Integration Specialist at SAS Technologies, where he was responsible for designing, programming and commissioning smart homes as well as new business development.
nicolasthomas
June 30, 2010 at 8:51 am
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