The following guest blog post is by Nicki Hutley, Director and Chief Economist at KPMG Economics…
On 1 July this year, Australia will introduce a price on carbon. It is fair to say that this has been an emotionally charged topic, and one where the facts are not always clearly presented or understood. This is why I strongly support initiatives such as 1MW.
As an economist, I became involved in climate policy around five years ago, and after researching most forms of climate initiatives – from the carbon price to solar rebates, and from feed-in tariff schemes to energy efficiency initiatives – I can see why Australia’s foremost economist in this field referred to climate change as a “diabolical problem”.
Australia’s cheapest and most abundant source of energy – coal – is also the most emissions-intensive. In comparison, cleaner technologies are relatively expensive, although prices are falling as they become more widely used and we learn more and more. It is very clear that, as a nation, reducing our greenhouse gas emissions won’t come without a cost. But importantly, as individuals, helping reduce your carbon footprint can actually save you money.
There are two key ways that we as individuals can reduce our carbon footprint – and our household energy bills – by using less energy.
- The first is simply to follow the golden rule: if you’re not using it, switch it off! We’ve all seen the incredible collective impact of initiatives such as Earth Hour. We need to carry this philosophy over into our everyday lives. Even something as simple as every Australian turning off their monitor every night does make a difference. The SA Government estimates that each monitor on left on standby costs you around $13 a year. If you start adding to that TVs, DVDs and sound systems, the dollars start to mount up
- Secondly, you can buy more energy efficient products to reduce your bills and your emissions. For some of these, such as solar or heat pump hot water systems, there are a range of Government assistance schemes which typically mean that the larger upfront cost of the unit is more than made up for by the very low running costs. In other words, the lifetime cost of a low emission hot water unit is actually lower than that of an electric or even gas unit. And with electricity and gas prices forecast to continue to rise sharply in coming years, the economics will become more favourable.
The secret here is to do your homework before your old system goes on the blink, so that you can replace it quickly. The same goes for rooftop solar panels. I was involved in a research project on these a couple of years ago, and when I looked at the economics, I signed up pretty quickly. Of course, each state has different policies and not all homes are suitable, but a reputable installer should be able to show you if and how you – and the environment – can benefit.
The same rule applies to all our whitegoods and other appliances. Energy (and water) efficiency labels are provided on many of these products to help us. But because it can be tricky to know whether you might save more on your electricity bills by paying for a slightly more expensive model, there are a number of websites that can help you do the comparison, such as www.energyrating.gov.au. It pays to do your research!
And you can spend less and still save more, for example by buying a slightly smaller screened more efficient TV can save hundreds of dollars over its life (and plenty of emissions too!) In the new financial year, many households will receive financial compensation for the impact of the carbon price.
You can chose to keep burning energy in the same way and hand over that money on household bills. Or you can become more energy smart – and buy yourself a treat instead as a reward for helping to reduce emissions. I know what I’d do.
About the author: Nicki Hutley is one of Australia’s leading economists, with 25 years of financial markets and economic consulting experience.
This blog has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information continued in this blog without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this blog, and, to the extent permitted by law, KPMG, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. Although KPMG exercises reasonable care when making forecasts or predictions, factors in the process, such as market behaviour, are inherently uncertain. As such, future events may not unfold as expected and actual results achieved for the forecast periods covered will vary from the information presented. Any estimates or projections will only take into account information available to KPMG up to the date of the deliverable so findings may be affected by new information. Accordingly, we do not warrant or guarantee that any outcome presented in this blog will be achieved.
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