Efficiency and the environment: Consumer driven climate change solutions

Climate change has emerged as an issue that affects every aspect of our lives, from our homes to our businesses. The role of human activity in accelerating climate change is now an accepted science. In addition, there is global consensus that emissions reduction is the path to dealing with this issue; these factors combined mean the cost of carbon will be a focal point for policymakers around the world. For consumers in particular, this means efficiency gains will be essential for maintaining quality of life.

The ABS's Australia's Environment, Issues and Trends report released in January delivered a timely reminder of not only how far we have come in increasing our energy efficiency, but also how far we need to go in order to reduce emissions. Australians are some of the world's largest per capita emitters of greenhouse gases – producing 1.5% of world emissions despite having just 0.3% of the world's population.

As the table below shows, the majority of Australia's emissions come from energy production – meaning the role of energy consumers in meeting emissions targets will be critical. Reductions in waste and the once-off reductions realised with the curtailing of land clearing mean the frontier of future emissions reductions will be efficiency gains.

Fittingly, the snapshot presented by the ABS shows a society in flux – with energy efficiency and awareness becoming a priority for consumers, who are taking concrete steps towards reducing their emissions and becoming more energy efficient.

To illustrate this changing attitude to energy use:

• In 2007-08, almost 90% of Australians reported taking steps to limit their electricity use – with the main reason given for not doing so being their electricity use was already low enough;
• When buying new appliances, energy efficiency was stated as being more important than purchase price for almost three quarters of Australian consumers buying air conditioners and refrigerators;
• Between 2000-01 and 2004-05, water use per person fell 14% in Australia – and from 1994 to 2007 the proportion of houses with water conservation devices more than doubled; and
• Almost two thirds of Australian households reported having insulation in 2008, up from 52% in 1994.

These figures show the use of incentives and restrictions (particularly for water) have been effective in increasing efficiency – and with emissions reduction policy uncertain at best, the role of incentives and voluntary actions like these may yet prove to be a key factor in controlling climate change.

Following the Global Financial Crisis and with a Federal election looming, the major political parties will be placed in the awkward position of wanting to appeal to public sentiment (which still largely favours action on climate change) while still protecting jobs and shielding consumers from increased prices. Whether emissions reductions without increased consumer costs can be made a reality remains to be seen, but if it is to happen, efficiency gains will almost certainly feature heavily in such a solution.

For more information on efficiency and the environment, or for any general economics query please contact Ashley Page on 07 3831 0577 or email him at ashley@aecgroupltd.com