The Victorian Energy Efficiency Target (VEET) is a government initiative designed to make energy efficiency activities more affordable to the public and industry.

The scheme encourages innovation in product development and services, creating jobs in the sector whilst reducing our overall greenhouse gas emissions.

A Victorian Energy Efficiency Certificate (VEEC) represents one tonne of carbon dioxide equivalent (CO2-e) abated, meaning one tonne of “avoided use” created under one of the scheme’s prescribed activities. By saving energy, you can create VEECs which have a value in the Australian environmental market, where there are creators of credits and liable parties who buy these credits. VEECs are currently trading between $17 to $19, making these activities more and more attractive. Through the implementation of an activity, you get an income stream for saving energy in the overall sense whilst reducing your power and gas bills in the longer term.

Some of the current industrial “energy” prescribed activities include:

  • Commercial hot water – replacement of electric storage hot water with a more efficient system
  • Commercial lighting upgrades – installing more efficient lighting equipment in offices, factories, hospitals, nursing homes and other large premises
  • Motor replacements – replacing motors with high efficiency motors
  • Refrigerated Display Cabinets – replacing refrigerated display cabinets with high efficiency units
  • Refrigeration fans – replacing refrigeration fans and motors with a high efficiency fan and motor

Some of the current industrial “water” prescribed activities include:

  • Low flow trigger nozzles – decommissioning and inefficient trigger nozzle and installing an efficient one
  • Pre-rinse spray valve – decommissioning and replacing an inefficient one with a more efficient one

At first glance some of these activities may appear complex, when in fact these are very simple measures that the industrial sector can use to maximise their future savings of electricity, gas and water.

Unlike the ASX, there is no formal trading floor for the VEEC market. There are, however, natural buyers and sellers in this market and most transactions are done through the use of brokers or third parties. With this current annual target set at 5.4 million tonnes of abatement at an average value of $14, the size of this state based market mechanism of just the tradeable certificates alone is in the order of $80 million for 2015. This number does not include the value of the products sold and installed or the value to the community of the people employed.

In December, the new Andrews Labor Government announced they would retain the VEEC scheme saving some 2,000 Victorian jobs. The government intends to hold a review in the first half of 2015 with the intention of strengthening the VEET scheme further. More recently Lily D’Ambrosio, the Minister for Energy and Resources, hosted a round table of stakeholders in the energy industry to discuss the Government’s plans for energy efficiency and future productivity gains.

“Energy efficiency policies that are fair, effective and efficient are an essential part of our energy vision for Victoria and will benefit the environment, boost productivity and create much-needed jobs,” D’Ambrosio said.

As has happened in the past, the state governments quite often have to take the initiative, leading by example in the absence of federal government action on greenhouse gas abatement, climate change and adaptation.