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Spreading the benefits of energy efficiency to everyone

Anne Martinelli from Environment Victoria outlines how the One Million Homes Alliance plan to roll out energy efficiency retrofits to low income households would save billions of dollars in Victoria’s concessions budget, create jobs, and reduce energy and water costs in the community.

The promise

For most Victorians, energy and water bills represent a large and rapidly growing hit on already stretched household budgets. In the face of rising prices, many Victorians are investing in efficiency measures like weather-sealing, insulation, efficient lighting and water-efficient fittings to cut their usage and their bills.

And no wonder, when you consider that raising a home’s energy performance to 5 stars (as rated by a national dwelling thermal performance measurement schema) can cut annual energy costs by at least 40 percent, or more than $1000 a year for an average household.

But low-income Victorians – those who most need these savings – are missing out because they can’t afford the upfront costs of even basic efficiency improvements or because they rent.

Ahead of the 2010 Victorian election, the then Coalition Opposition committed to lifting the energy efficiency of Victorian homes to an average of 5 stars. This commitment was a response to a strong cross-sector push by environment, social justice and consumer groups including VCOSS and Environment Victoria, for a green makeover of our homes.

But disappointingly, no progress has been made over the last four years to progress this very clear election promise.

The One Million Homes retrofit plan

Nearly half of the energy we use at home goes on heating and cooling. And yet a big chunk of that expensive energy is simply blowing out our leaky windows. Houses built in Victoria before 2005 average less than 2 stars, meaning they are hot in summer and cold in winter and cost a fortune to keep comfortable.

One Million Homes water efficient shower head

For low income Victorians who are most likely to live in poor quality housing, that can pose a serious risk to health – particularly in extreme weather events like a heatwave.

Because of the government’s inaction, tens of thousands of Victorians suffered more in last January’s heatwaves than would have been the case with even modest progress. And these same households are now emerging form another cold and costly winter spent in a draughty, poorly insulated house.

The One Million Homes Alliance of Victoria’s leading social justice, consumer and environmental organisations has been calling on government since 2009 to commit to raising Victoria’s pre-2005 housing stock to an average of 5-star and 100 litres per person per day standard by 2025.

The centerpiece of this commitment would be implementation of a comprehensive retrofit program targeting Victoria’s one million lowest-income  households.

Retrofitting 1 million homes would cut Victoria’s annual greenhouse emissions by more than 2 million tonnes (or about 2 percent of Victoria’s total emissions) and save 32 billion litres of water for our rivers.

It would also create 6,000 – 7,000 jobs in trades and manufacturing, more than 40 percent of which would be semi-skilled, providing opportunities for disadvantaged and under-utilised job-seekers.

And it would save the Victorian government an estimated $2.5 billion over 20 years from the energy concessions budget.

How could we do it?

While every house is different, most older homes would see a significant improvement in performance from spending less that $5,000 on efficiency measures such as draught-sealing, insulation, window shading and curtains and water-efficient fittings.

But many Victorians, particularly those most vulnerable to bill stress, simply can’t afford the upfront retrofit cost, regardless of how attractive the savings might be down the track. And renters face a situation where landlords have little incentive to invest in improvements that deliver savings and improved comfort to the tenants.

This is why despite the growing popularity of energy efficiency and renewable energy amongst Victorians over the last decade, there is still an important role for government in ensuring the benefits of efficiency are spread widely and fairly, and that those most in need aren’t missing out.

A comprehensive retrofit program could be delivered through a mix of direct government investment in public housing and assistance for low-income home-owners, complementary policy measures (such as minimum standards at the point of sale or lease), rebates and a variety of financing models which allow householders to use bill savings over time to contribute to overall costs.

One Million Homes - insulation

Industry advice and Alliance member experience in implementing similar programs indicates that government investment averaging $2,500 per house, in combination with the above policy measures and an expanded Victorian Energy Efficiency Target would be sufficient to leverage complementary investment by landlords and other home-owners so as to drive cost-effective implementation.

The cost to government would be recouped through an estimated $2.5 billion in savings from the energy concessions budget over 20 years.

A comprehensive retrofit program would be tailored to address the specific hurdles faced by three key vulnerable groups – low-income homeowners, low-income renters in the private rental market, and public housing tenants.

The nearly 450,000 households in the lowest quintile of equivalised household income – of whom almost half are tenants – represent Victoria’s most disadvantaged households and are the highest priority for direct government investment in upgrading their homes. The roughly 450,000 households in the second quintile, many of whom would also be concession card-holders, would need a lesser but still material level of assistance to help them to overcome up-front cost and other barriers to participation in energy efficiency activities.

The large-scale, comprehensive retrofit program would commence with a 5,000 to 10,000 home pilot in the first year and be increased to 100,000 homes annually in later years, as the lessons learnt from the pilot were scaled up into full program delivery.

The pilot would be designed to test the effectiveness of different suites of retrofit measures on a range of dwelling types across a range of climate zones, as well as a range of delivery and financing models.

There are many clear examples here and overseas that highlight the critical role of government in brokering finance and setting the policies and programs that help leverage private investment.

Positive Charge is an initiative of the Moreland Energy Foundation and local government that is rolling out home retrofits across five metropolitan municipalities. The City of Port Phillip’s Climate Challenge 1000 program has retrofitted 1000 households (many of them concession card-holders) in partnership with local community organisations.

But positive as these initiatives are, there is a limit to what can be achieved in a reasonable timeframe at a local level. There is an urgent need for the state government to create and implement policies that will weave these positive but piecemeal initiatives into a comprehensive program that benefits all Victorians.

No time to lose

In an era of tight state and household budgets, rising unemployment and the imperative to achieve cost-effective emission reductions, this is a policy that ticks all the boxes – economic, social and environmental.

Retrofitting our homes is a crucial investment in Victoria’s future. It is living infrastructure that improves the quality of both housing stock and people’s lives, delivers long term affordability in energy and water bills, locks in low-cost emissions reductions, alleviates pressure on water supplies and improves our community’s resilience to the health impacts of extreme cold and heatwaves.

In the lead-up to this November’s election, the One Million Homes Alliance is once again calling on all the major parties to commit to action.

All Victorians deserve to enjoy the benefits of efficiency – not just those who can afford the up-front costs.