I’ve thought some more about the home insulation component of the stimulus package and I’ve come to the conclusion that (drum roll!) my immediate reaction was correct. In the absence of a corresponding lowering of the aggregate emissions target, the package will have no effect at all on emissions. The Australia Institute has come to the same conclusions, and IPART (the NSW utility regulator) has made the same point in a more general context.
Some minor qualifications to this. As Joshua Gans points out here The Russell Girl divx the effect of the scheme will be to reduce the demand for permits and therefore the equilibrium price. If the “safety-valve” price in the CPRS is binding, the scheme will reduce the government’s obligation to supply permits at the safety valve price. And, if home insulation is a cost-effective method of reducing emissions, which householders are neglecting for reasons such as credit constraints, the scheme could allow the target to be reached at lower social cost. This might, in the long run, encourage more ambitious targets
But there is no need to wait for the long run. The Greens and any other Senators who care about saving the planet should demand a reduction in the emissions target, equal to the savings from the scheme, as part of the stimulus package.
John Quiggin 
John, you might be interested in this thread at LP on the topic.
Note the comments of Tim Hollo on the concept.
Interesting discussion.
It seems to me the divergence between our host, JQ, and Joshua Gans, rests on a potential divergence between the ecological-science determined target and the political process determined emission target and their timing.
As far as I can tell, Joshua Gans’ point is valid if we are talking about the political process determined emission target being equal to the ecological-science determined target. But John Quiggin’s point is valid if the political process determined emission target is lower than the ecological-science target.
The states are also working on various energy efficiency schemes, NEET in NSW, VEET in Vic, etc. These schemes would reward household improvement measures.
These schemes should also contribute to further emission reductions, as John says above about the insulation package.
So, 5% reduction would become (5% + energy efficiency) reduction.
Some of the environmental groups are saying up to 15% reduction could be achieved energy efficiency, though I’m not sure how realistic this is in practice.
Perhaps it wont impact emissions, but it will impact household energy bills and (possibly, though unlikely IMO) help to reduce peak demand, both good things.
I would say the insulation policy is public servant driven rather than politician driven.
There is a lot of policy development at all levels of government about reducing emissions in the residential sector. However, most of it focuses on new buildings, since the planning system can regulate there, whereas it can’t regulate energy efficiency in existing homes.
Reducing energy consumption in existing homes has long been regarded as a policy hole, and no doubt when treasury began requesting proposals from all departments for policies to spend money on as part of the stimulus package, the policy makers working on residential energy efficiency saw an opportunity and already had done a lot of thinking as to how to do it.
NSW has had a rebate for installing insulation in existing homes for over a year now, so there is a body of work in the area that the federal policy makers are building on.
Regardless of the impact on emissions, I think it is unlikely that an ETS would be that great for driving energy efficiency improvements in existing homes anyway – too administratively burdensome to get the credits created and cajole the householders, its not as quick and painless as lightbulbs and showerheads, or as easy to calculate the reductions, which will be very house specific when it comes to insulation.
Home insulation is an example of a potentially cheap form of reduction that would not get picked up by at ETS, but needs a different kind of policy.
As a resident of tropical Cairns with an Esplanade frontage townhouse built in the 70’s with zero insulation I have my keenly tuned snout in on this one!
Bring it on have missed out on all the other snout troughing handouts in recent years so maybe it’s my turn?!
P.S. I also dont have aircon in this climate unlike my youthful environmentally conscious neighbours who run their old ineffiecient box aircon with no insulation 24/7
As I said at LP, rather than readjusting the emissions trajectory every single time the government does something to reduce emissions, these arguments should be saved up for the five-year strategic reviews of the Scheme, the occasions on which the next segment of the emissions trajectory is specified.
#7 This seems a strange claim to me, especially given that the scheme has not even been implemented yet. If you want to go this way, then why not get the government to set a target in advance for policy-driven reductions, and subtract that from the announced target, instead of implicitly setting the target to zero and reassessing it in five years time.
#8 My attitude is that the ultimate goal is carbon neutrality, but that we have several decades to get there, and that the role of short-term carbon caps is primarily just to get us moving in the right direction. I would rather see the legislation passed as it is, instead of insisting on modifications which make no difference qualitatively.
Steve#5 said
“There is a lot of policy development at all levels of government about reducing emissions in the residential sector. However, most of it focuses on new buildings, since the planning system can regulate there, whereas it can’t regulate energy efficiency in existing homes.”
Then Id like to know why – in the past 10 years there have been so many units built on the Northern beaches with NO common property for a dryer and why so many units have come equipped with dryers only (and body corporate laws that say no washing drying on balconies”. It seems the greed of developers to utilise every bit of what was once “common property” for “individual courtyards” or units built almost to the boundaries, has enabled this blatantly energy wasteful situation to arise. Goodness know how many dryers are trying to spin soggy twisted sheets as we speak.
It seems you can have policy, but it doesnt get implemented or it has no teeth or its easily overruled.
If the planning system can regulate new buildings why arent to obvious energy users like dryers being regulated and why are there no choices for tenants? Planning isnt effectively regulating new buildings.
The fact that under the CPRS, investing in insulation will not affect overall emissions reductions is part of a larger problem. If households reduce their emissions, it won’t affect Australia’s emissions; if South Australia or the ACT reduce their emissions, that won’t affect Australia’s emissions; if a firm develops a low emissions energy producing technology that is cost competitive, that also wont affect Australia’s emissions. To address this issue requires a combination of policy measures:
1. The 5 year targets and 20 year target gateways should be stronger, and consistent with the science. My reading of Hansen’s work suggest that we face serious risks if we don’t stabilise at 350 ppm or less. Emissions reduction trajectories that do this are likely to involve global reductions of 5% per year (see Meinshausen et al., Multi-gas emissions pathways to meet climate targets, Climatic Change, 2006).
2. There needs to be a price floor that is also consistent with the science and economics of climate mitigation. When the floor is in operation (which is preferable), emissions reductions by entities will count.
3. There needs to be sufficient flexibility that targets can be tightened in response to action by households or other entities.
Hi Alanna,
Firstly, clothes dryers aren’t easily covered by planning legislation, as they are an appliance, not part of the building.
In any case, NSW had legislation that covered the construction of new multi-dwelling buildings (ie units) for energy efficiency from Oct 2006. So most of the units built in the last 10 years wouldn’t have been covered by this recent policy.
But now, if you want to build a new unit, you need to meet BASIX requirements. BASIX won’t ban the installation of clothes dryers in units, but it will ensure that overall, the energy performance of the development meets a certain energy efficiency standard, otherwise approval wont be granted. This might mean the developer decides to offset dryer energy use with, say, solar hot water, or get rid of clothes dryers alltogether and install clothes lines for each unit – depends on what the developer wants to do to meet the target. The target is set, but the means to reach the target are flexible.
So the regulation is there now.
http://www.basix.nsw.gov.au
The fact that once the CPRS comes in it will be impossible to lower emissions below the 2020 cap set by the government (unless the senate insists on ammendments) is not widely understood.
Whether you fancy roof insualtion, solar panels, increased investment in public transport or feed in tarriffs the result is exactly the same – no impact on the level of emissions and cheaper permit prices for polluters.
Some people are unconcerned about this and make the point that the whole idea of an ETS isto set a quantity and let the market set the price. While that’s true, it doesnt seem like many people have thought through the consequences of setting the target too low. The 5% target is not ‘the first step’, it is the final step. We will be locking ourselves into failure and actually preventing individuals, communities and even state governments from reducing emissions any further.
If the government is proud of this design feature they should explain it clearly to people and tell them not to waste their money on buying a prius or instaling solar PV. If they are worried about it then they imply need to modify the scheme so that the cap falls when such actions are undertaken.
not sure where I first heard it (possibly here) but the idea of a legislated investment of superannuation funds (of say 20% matched by the government) into renewable energy and carbon offsetting start-ups and R&D would seem to solve three of our biggest problems in one go: Jobs (in the near future), Energy/Pollution and SKI (Spend the Kids Inheritance on useless complex financials and mining behemoths). Can someone point out why this is bad policy or even bad politics.
Now if we ditched the ETS and went with a carbon tax instead then reductions in emissions due to government funded insulation wouldn’t have zero effect.
13#Steve,
Makes sense – at least I know why there are so many dryers around here but it still seems sort of nutty that they are even running, when a piece of common property and a few clotheslines in such a sunny country would do the job just as well. At least its good to know they now have to meet some overall basix requirements.
The discussion so far misses an important point.
In the warmer parts of this country the installation of bulk insulation (in preference to radiant barriers) will make houses hotter at night resulting in increasing use of air conditioners.
And even in the temperate zones, the issue is not clear cut: winter and summer comfort can have conflicting requirements.
In winter however you can rug-up (or burn sustainable timber ). In summer, there’s only refrigerated a/c for relief.
KitchenSlut at #6: be careful what you wish for.
Hi John,
I think you have a point regarding the appropriateness of insulation in various climates, and whether sometimes it has a negative impact. I think it is certainly challenging to design and build homes (or modify existing homes) so that they are comfortable in both summer and winter.
But i wonder if you are taking it to too much of an extreme? I think your discussion of the impact of insulation in summer is probably simplifying a bit.
Firstly, the building code recognises something like 60 different different climate zones around the country, and the level of insulation deemed appropriate is different in each area.
Second, whether you have insulation or not, your house is going to be hotter than you’d like at the end of a very hot day if that day has also been preceded by a string of hot days. The problem is perhaps best solved by opening a few windows rather than avoiding insulation altogether.
And on milder warm days, the insulation (with windows shut) probably helps to prevent the house from heating up at all.
Thirdly, I haven’t looked into it, but i think it is likely that reflective barriers will be included as part of the policy – I think they get effective R-values, and the requirements will be in terms of R-values. The NSW insulation rebate FAQ talks about different kinds of insulation, and suggests that reflective barriers are accomodated:
http://www.environment.nsw.gov.au/rebates/ccfcirfaq.htm
So i think the picture is complicated, but i’m sure the govt is relying on the long history of thermal modelling that Australia has when coming up with these policies, research that finds the best solution across the bulk of homes, even if some homes dont fit the mold.
Lastly, regarding use of sustainable timber. I love a woodfire myself, and agree that it is a great, green source of heating in terms of climate change. But it is going to be an inappropriate form of heating for the vast majority of homes in urban areas – especially in big cities like Sydney or Melbourne, but even problematic in many regional towns e.g. Armidale, Launceston, which have know wood smoke pollution problems.
A bit off topic, but I received a letter today, which read: “… I’d like to offer you the opportunity of $50 cash and a free quick and easy insulation check-up with absolutely no obligation whatsoever. That’s right, you get to keep the $30 whether you go ahead with us or not.”
I must plead guilty to over-simplification Steve, but I didn’t want to get into arcane thermodynamics and add to the confusion. The picture is, as you say, complicated.
Many years ago, however, a Professor Richard Aynsley from James Cook Uni undertook some research into the Queensland housing stock for the Qld government. He recommended that no house north of Brisbane should be insulated with anything except reflective foil. I don’t have links but I’m sure the report’s googleable if you’re interested.
I think it was Aynsley who coined the term “diode effect” to describe how foil stops radiant transfer into ceilings during the day, but allowed convective losses to the night sky when the sun had set, helping the house cool down. Night sky cooling is very useful when you have small diurnal temperature variations.
Batts display a similar property, but for different reasons, and they are definitely not beneficial. In the daytime hot roof space of an Australian house in summer, they can lose 40% of their thermal resistance but at night they recover their rated resistance to upward convective flow and help keep the house warm.
This aspect of bulk insulation is not recognized in the BCA, and for some odd reason radiant barriers are almost dismissed with curiously low R-equivalents.
Your suggestion of opening the windows certainly helps but won’t “solve” the problem, because breezes usually drop at night, and all buildings (except tents) have thermal lag, masonry being the worst.
Forgive me, but I think your faith in the regulatory authorities to get this right might be misplaced. I know that some of the “deemed to satisfy” requirements in the BCA are there because of industry lobbying, and as for the various house energy rating systems (H.E.Rs) there’s plenty of concern in academic circles that the rating schemes are seriously flawed.
It does not seem to be widely known that H.E.R. schemes cannot rate “free-running” houses and that surveys have shown no correlation between so-called “star ratings” and energy use.
Lastly I agree with your comments about wood fires. I was just making the point that, in extremis, you could burn something from a sustainable source to keep warm, but to keep cool you have to burn coal.
BTW, unless I’m unaware of recent changes, I thought the BCA only had 8 climate zones for Australia. Trying to calibrate one’s insulation requirements to a best fit of 60 options sounds to me like excessive precision.
“BTW, unless I’m unaware of recent changes, I thought the BCA only had 8 climate zones for Australia.”
Whoops, quite right, I meant AccuRate, the latest home energy rating software, not the BCA. AccuRate has over 60 different climate zones. That was what I was referring to – the simulation method of compliance.
“that surveys have shown no correlation between so-called “star ratings” and energy use”
Hahahaha, totally agree that star ratings are problematic, and that more stars = less energy should not be regarded as an absolute rule – far from it.
But at the same time, it is perhaps a bit harsh to say “no correlation”. All other things being equal (house size, climate, occupancy, behaviour, appliances, and the ratio of cooling to heating load etc etc), a higher star rating house probably would enable lower energy consumption than a lower star house. A lot of other things that would need to be equal to draw that conclusion i guess.
I’ve read the links and I believe the ETS/CPRS should work as intended, if only the target wasn’t so pathetic. Gas and coal fired electricity create a derived demand for CO2. If insulation reduces that demand the CO2 price lowers supply factors being unchanged. That’s the way it is supposed to work provided political exemptions and unsound credits or offsets don’t weaken the supply ceiling. I presume that ceiling will be around 500-600 Mt of CO2 equivalent for the year beginning 1/7/10. Incidentally that’s less than emissions from our coal exports.
Moreover I’d argue it is good to hit the ground running with household energy savings before that date. If as claimed insulation saves $200 on thermal comfort costs then the pain of ETS boosted energy prices will be easier to bear, whether the bills go up $100 or $300. I however note senators Minchin and Joyce are confident the ETS will be scrapped. Maybe they want +10% emissions change not -5%. The good senators appear to believe firestorms are caused by firebugs not climate change.
Steve
“a higher star rating house probably would enable lower energy consumption than a lower star house. A lot of other things that would need to be equal to draw that conclusion i guess”
It would seem axiomatic that a higher star rating house would consume less energy than one with a less stars. Only a simpleton would argue with that proposition.
Yet that apparently is one of the problems with HER schemes. And remember these are mandatory.
Chapter 10 of the Productivity Commission’s report into energy efficiency (link below), was pretty scathing of HER schemes and the BCA, recommending as a matter of urgency that the BCA commission ex-post evaluations of the various energy rating schemes before further mandatory requirements were imposed. Expert evidence was presented to the PC that the schemes had been ineffective and costly, reflecting similar findings overseas.
I’ve also included some other links that might find interesting ( PS had to delete the links to get past the spam filter, but you can google them)
If you only get to read the titles of the papers you might get the feeling that all is not well with the current breed of house energy schemes that are being rammed down our, well, chimneys (?)
“Problems of house energy rating (HERS) in warm-humid climates” Prof Steven Szokolay. University of Queensland
“Why are rating schemes always wrong ?” Maria Kordjamshidi, Steve King, Deo Prasad. Faculty of the Built Environment, University of New South Wales
“Household energy rating. Questioning the current direction” Steve Watson, Dr Richard Hyde. Dept of Architecture, University of Queensland
“Towards the development of a Home Rating Scheme for free running buildings” Maria Kordjamshidi, Steve King, Deo Prasad. UNSW
“Nathers: Science and Non-science” T.J. Williamson, S. O’Shea, V. Menadue. School of Architecture, University of Adelaide
“House/Home Energy Rating Schemes/Systems (HERS)” Terry Williamson, Veronica Soebarto, Helen Bennetts, Antony Radford. School of Architecture, University of Adelaide
“Submission to the Productivity Commission Enquiry into Energy Efficiency” Laurie Virr and Paul Hanley
“Energy-Efficiency Standards in Residential Buildings: A Plea for Evidence-Based Poliicy Making” Dr Terry Williamson. School of Architecture, University of Adelaide
“Perceived and Prescribed Environmental Performance of Award Winning Houses” Veronica Soebarto, Terry Williamson, Antony Radford, Helen Bennetts. School of Architecture, University of
Adelaide.
A defence of earth building by Rob Freeland (of AMCER Earth Bricks)
Productivity Commission’s Report
http://www.pc.gov.au
In the following article Richard Denniss from the Australia Institute makes the same point that I made in comment 16 above.
http://www.theaustralian.news.com.au/story/0,25197,25070069-7583,00.html
The money quote is this:-
“Did you know, for example, that once the CPRS comes in, individual efforts to reduce energy use will have absolutely no effect on the level of Australia’s emissions? If a household spent thousands of dollars putting solar panels on their roof and insulating their ceiling, and rode their bikes everywhere, it would not reduce Australia’s emissions by a single kilogram. “
So much for personal responsibility. How typical of a government initiative to destroy all individual initiative. How typical of a government program to transfer the profit from individual endeavour to the big end of town. How typical of a government program to encourage citizens to sit on their hands.
For the sake of this discussion CPRS = ETS.
And how does Richard propose that we redress this problem.
“So, where to from here? A simple way to get the ball rolling without locking in the worst features of the CPRS is to introduce a carbon levy of $25 a tonne. This is the same price the Rudd Government expects to flow from its CPRS and it has already done the work figuring out how to provide compensation. “
Hat tip to Jason Soon for the article.
http://www.catallaxyfiles.com/blog/?p=4171