REPORT: Scaling up the NEPP – Energy productivity a ‘silver bullet’ for Australia

Analysis indicates that the National Energy Productivity Plan (NEPP) can be aggressively applied in the immediate-term to deliver large scale emissions reductions at a negative marginal cost. In this way, a scaled up NEPP is able to become the main driver of Australia’s emissions reduction policy framework through to 2030.

Focusing on negative cost abatement opportunities via regulation would see Australia follow the California climate change policy model, where the majority of that state’s abatement is derived from negative cost renewable energy, fuel efficiency and vehicle efficiency regulations. These regulations are supported by a smaller contribution from high emitting covered sectors.

Key findings include:

• • Marginal abatement cost (MAC) analysis indicates that Australia has a significant volume of cost saving opportunities, with 20 per cent of all abatement activities across the economy having a ‘negative marginal cost’. These opportunities include distributed solar photovoltaics (PV), fuel efficiency and industrial efficiency with each representing a major opportunity to reduce emissions with a positive return over the lifetime of an investment.

• • Modelling indicates that energy productivity activities can contribute around 43 per cent of Australia’s abatement task to meet its 2030 target, or 66 Mt