A new report published by the Australian Industry Group has found that while energy efficiency continues to rise, energy prices are still placing mounting pressure on businesses.

 

Ai Group’s Energy Shock: pressure mounts for efficiency action surveyed over 300 businesses across the economy, gathering information about their use of energy (electricity, gas and liquid fuels), their management of electricity costs and energy efficiency practices and their views on current policies to encourage additional action in these areas.

 

The report shows a significant turnaround in energy efficiency policies of companies.

 

“Previous Ai Group research showed that in the five years to 2010, two thirds of businesses made no or negligible improvements in their energy efficiency[1]. The report we are releasing today reveals this situation has been reversed,” Ai Group Chief Executive Innes Willox said.

 

“In the three years to 2012, two thirds of businesses have achieved improved efficiency performance. Three quarters of respondents have now taken or are planning actions to improve energy efficiency.”

 

The survey found that average expenditure on energy as a percentage of turnover had increased by 10 per cent between 2008 and 2011, with regulators projecting that retail electricity prices for small users will have risen to 37 per cent by 2013.

 

"Many businesses are starting to feel these strains. Most respondents described energy costs as a major expense. This appears to have been a catalyst for action by businesses to improve their energy efficiency, although most businesses will need to do more to blunt the impacts of rising energy prices,” Mr Willox said.

 

The key findings of the report are as follows:

 

  1. An increasing share of business effort is being directed towards energy efficiency improvement, and pressures are mounting to do even more.
  2. However, to date most efficiency improvements have been relatively modest, indicating that business capital for investment is either not available or is being used for other purposes.
  3. While a growing number of businesses are taking action to improve their energy efficiency, most are looking for quick wins and would only consider an energy efficiency project where the expected payback period was less than three years.
  4. Reflecting this, the most popular energy efficiency activities included changing staff practices to encourage energy efficiency and identifying major areas of high energy use in the business (nearly 50 per cent of respondents each).
  5. The biggest drivers for efficiency action were concerns about energy prices and the desire to maintain or enhance business profit margins.
  6. The anticipated introduction of carbon pricing was also a strongly cited motivation for future energy actions.
  7. Many government policies to support efficiency are in place or under consideration, however, results suggest uptake would be greater if industry was more closely engaged in development and roll-out.

 

The key recommendations in the report are:

 

  1. That government more closely engage with industry in the design, implementation and evaluation of energy efficiency policies.
  2. That government conduct further analysis of the reasons businesses would or would not try to access specific forms of government assistance with a view to improving the effectiveness of energy efficiency policy.
  3. That further research is conducted to track business responses to changing energy prices, to determine the degree to which those prices are impacting costs and competitiveness, and to identify drivers and barriers to further improvements in business energy efficiency.

 

The full report can be found here