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Vic Gov't axes energy efficiency scheme


Source: Business Spectator, 21 May 2014

The Victorian Government has announced that it intends to abolish the Victorian Energy Saver Incentive Scheme, also known as the Victorian Energy Efficiency Target or VEET. The scheme will run for one more year with its target slashed from 5.4 million tonnes of CO2 abatement this year, down to 2 million next year.

The justification for the decision is revealed on page iv of the government’s business impact statement. According their cost benefit analysis,

The scheme has benefited residential consumers who have participated in the scheme through decreasing their energy bills; however, non-participating households and businesses have experienced increases in their energy bills. This result suggests that the benefits accrued by consumers participating in the scheme, while outweighing the costs incurred by non-participating consumers, represent a transfer from energy generators and retailers to these consumers through a loss of profits.

Essentially while energy consumers as a whole have ended up better off, their gains will be outweighed by losses of profit to energy suppliers, leaving the overall economy worse off.

While this justification is likely to raise eyebrows in itself, there are a series of factors surrounding how the government came to its decision which raise serious doubts about its rigour, and the validity of its conclusion that the costs of the scheme outweigh its benefits. This especially so when another highly detailed study for the Federal Government came to a different conclusion.

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