Why home energy efficiency upgrades are the perfect economic recovery option

Photo: Shutterstock
Photo: Shutterstock

Since the COVID pandemic hit, an unprecedented consensus amongst non-traditional allies has emerged on the importance of making our homes and businesses more energy efficient.

As Cassandra Goldie, CEO of the Australian Council of Social Services commented earlier this month, "If you're looking for consensus - broad-based support for something - I've not seen anything like what we're seeing in terms of support for investment in energy efficiency".

Until recently, energy efficiency was often neglected by policy makers who tended to focus on energy efficiency's more glamorous cousin, renewable energy.

While the construction of new renewable energy facilities is clearly vital in moving us away from fossil fuels, ignoring energy efficiency will make our transition to net zero emissions more costly and possibly wasteful.

If we don't reduce demand for energy through efficiency measures, we'll end up building new energy supply facilities that we potentially don't need. Thus, we need to address both at the same time. The reason for this renewed interest is that home energy efficiency upgrades make for the perfect economic stimulus from the COVID pandemic - in both urban and rural areas.

In its recent economic stimulus report, Design Principles for Fiscal Policy in a Pandemic, the Australia Institute outlines the principles that should guide government spending during a major economic downturn.

Home energy efficiency upgrades tick all of the boxes. We need to "go early" - in order to minimise job losses and further economic pain, "fiscal stimulus should be rolled out as jobs are being lost, if not before."

The size of the stimulus is also crucial. The total, annual value of production per worker in Australia is estimated at $412,000, so in a pandemic, public spending must match this to make up for the contraction in private sector spending. For every 100,000 jobs, this equates to public spending of $42.1 billion per annum.

Plus, focusing stimulus on households is a win-win for state and federal governments. The report points out that "government transfers to individuals and businesses are not stimulatory until they are spent on goods and services - which brings forth additional production and employment".

Upgrading people's homes to use less energy helps people save money on their energy bills which then allows them to spend this money in other parts of the economy, especially if they've lost income during the economic downturn.

Given that low-income people spend around 4 per cent of their income on energy bills, targeting these people will have greater stimulatory impact than helping higher income households.

Research is now emerging demonstrating that home energy efficiency upgrades are one of the best ways governments can spend their money to create jobs and kick-start our economy during the current economic downturn.

Beyond Zero Emissions' recent report, the One Million Jobs Plan, maps out a comprehensive home energy efficiency program as by far the most effective and jobs-rich stimulus measure state and federal governments could undertake to steer us toward economic and environmental recovery.

The report proposes a five-year plan to provide deep energy efficiency retrofits to 2.5 million homes across Australia over five years (500,000 homes/year). The proposal would cost $8.2 billion per year and create 430,000 jobs over that period.

In terms of job creation, this is by far the most significant stimulus measure proposed, followed by the construction of renewable energy projects, which would create 200,000 jobs over the period.

We urge both state and federal governments to urgently commit to a transformative home energy efficiency retrofit packages which would create much-needed jobs and stimulate local industries, as well as make our homes more comfortable, efficient and sustainable.

James Conlan is the Sustainable Homes Project & Policy Officer for Environment Victoria

This story Why home energy efficiency upgrades are the perfect economic recovery option first appeared on The Canberra Times.