Victoria Releases Draft Victorian Energy Efficiency Target Regulations 2018

Tuesday 22 May 2018 @ 9.43 a.m. | Legal Research

Last Thursday, 17 May 2018, the Victorian Department of Environment, Land, Water and Planning (the “Department”) began consultations on the draft Victorian Energy Efficiency Target Regulations 2018 (Vic) (the “draft regulations”). The draft regulations were formulated by the Department following a review of the Victorian Energy Efficiency Target Regulations 2008 (Vic) (the “2008 regulations”) which are set to expire on 11 December 2018. Submissions for the review of the draft regulations will close on 19 June 2018.

Legislative Background

The legislative background behind the draft regulations was outlined in the Regulatory Impact Statement published alongside the draft (p iv):

The Victorian Energy Efficiency Target Act 2007 (the Act) provides the legislative basis for the Victorian Energy Upgrades program, a market-based incentive mechanism to encourage improvements to energy efficiency of residential homes and non-residential premises.

The activities that attract incentives and the methodologies for calculating greenhouse gas (GHG) emissions reductions, are set out in the Victorian Energy Efficiency Target (VEET) Regulations 2008. The current Regulations are due to expire or ‘sunset’ on 11 December 2018 in line with the Subordinate Legislation Act 1994. This provides an opportunity to review and update the Regulations to ensure the ongoing effectiveness of the program.

The proposed Victorian Energy Efficiency Target Regulations 2018 (the proposed Regulations) will replace the VEET Regulations 2008 (the current Regulations). […] There are currently two sets of regulations made under the Act, the VEET Regulations 2008, and the Victorian Energy Efficiency Target (Project-Based Activities) Regulations 2017 (PBA Regulations). The PBA Regulations are not sunsetting. The continued existence of the PBA Regulations forms the basis of a comparison of options for remaking the VEET Regulations 2008.”

The Regulations

The objectives of the draft regulations are outlined in regulation 1:

“The objectives of these Regulations are to provide for—

  1. activities that result in a reduction of greenhouse gas emissions that would not otherwise have occurred if the activities were not undertaken; and
  2. the shortfall penalty rate; and
  3. the method and variables to calculate the carbon dioxide equivalent of greenhouse gases to be reduced by a prescribed activity; and
  4. any other matter or thing authorised or required to be prescribed or necessary to be prescribed for carrying the Act into effect.”

The regulatory impact statement further outlines the necessity for the proposed regulations on page (iv):

“In the absence of remaking the Regulations, the Victorian Energy Upgrades program could not achieve its intended outcomes and the significant benefits associated with the program would not be realised. For these benefits to be fully realised at lowest cost, a range of eligible activities are required that provide a wide variety of opportunities for Victorian households and businesses to participate in the program. The Act requires that eligible activities be prescribed in regulation. To ensure the integrity of the program, regulations must also set out a reliable methodology for calculating GHG emissions reductions and ensure additionality of GHG emissions reductions. Without these principal Regulations, the Victorian Energy Upgrades program would cease to operate in its current form.”

As such, the draft regulations were formulated to replace the 2008 regulations with the addition of a number of key findings which the Department found in the course of their initial review.  These findings, as summarised on the proposed changes document published with the draft regulations, are (p 1):

  • the need for the revision or removal of existing activities
  • the benefit of introducing new activities
  • the requirement for minor system-wide changes to all activities
  • adjustments to how the Regulations are structured and written, which have added clarity, consistency and modernised the drafting.

Some of the key changes which are proposed by the draft regulations, as outlined on pages 2 and 3 of the proposed changes document, are:

  • ESC product register exemptions: it is proposed to no longer require products to be approved by the ESC, so long as they are on the Greenhouse and Energy Minimum Standards (GEMS) Register. This applies to reverse cycle air conditioners, refrigerators and freezers, televisions, clothes dryers, electric motors, refrigerated display cabinets.
  • Introducing greater flexibility: it is proposed to allow the department to list emerging technologies as an upgrade product in the Specifications for certain activities. This would apply to activities including space heating and cooling, water heating, glazing, weather sealing, refrigerators, clothes dryers, pool pumps and electric motors.

  • Calculating greenhouse gas reductions: there have been changes to the form of the equations used to calculate the GHG reduction from an activity. This includes modifying equations to show the baseline energy use (before the upgrade) and the upgrade energy use (after the upgrade) for an activity.

  • Water Heating – Parts 1 to 4: proposed changes to water heating activities include:

    • removing Schedule 2 and 4 (retrofitting of electric or gas heaters with solar), and splitting Schedule 1E into two upgrade scenarios (install electric boosted solar water heater or heat pump water heater)

    • requiring heat pump water heaters to meet the requirements of heat pump zone 5 (Canberra) instead of zone 4

    • reducing the amount of GHG reduction provided for most upgrade scenarios

    • aligning modelling requirements for solar water heaters to the Commonwealth Small-scale renewable energy scheme.

  • Space heating and cooling – Parts 5 to 10, and 23: space heating and cooling activities are divided by the type of upgrade product, with each activity offering several decommissioning scenarios. Other changes include:

    • higher star rating options for gas ducted heaters

    • new minimum eligibility criteria for ducted and non-ducted air to air heat pumps

    • increased GHG reduction when decommissioning an inefficient product, including fixed electric heaters

    • changes in the GHG reduction provided for most upgrade scenarios

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Victorian Energy Efficiency Target Regulations 2018 (Vic) - Draft and explanatory material available on TimeBase's LawOne service.

Victorian Energy Efficiency Target Act 2007 (Vic), available on TimeBase's LawOne service.

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