1. Purpose of program
2. Program participation and requirements
3. Undertaking assessments
7. Using consultants
8. Other Energy Reporting and Efficiency programs
9. Assistance for participants
10. Technical information
1. Purpose of the programWhat does Energy Efficiency Opportunities aim to do?
The Energy Efficiency Opportunities program encourages large energy-using businesses to improve their energy efficiency. It does this by requiring businesses to identify, evaluate and report publicly on cost effective energy savings opportunities.
The Energy Efficiency Opportunities program is designed to lead to:
How do I know whether my corporation uses 0.5PJ of energy in a financial year?
- Improved identification and uptake of cost-effective energy efficiency opportunities
- Improved productivity and reduced greenhouse gas emissions
- Greater public scrutiny of the energy use of large energy consumers.
First, you should determine which subsidiaries and related corporations are members of your corporate group. You then need to gather any data you have on your corporation's energy consumption, for example from metering, utility bills, delivery dockets, or fuel tank dips. You can then use the Calculator on the National Greenhouse and Reporting System (NGERS) website to convert data on energy consumption into PJs. Further details about determining your corporate group and energy use are in Chapter 2 of the Industry Guidelines.What are the benefits of participating in the program?
There is solid evidence that even those businesses that already focus on keeping costs to a minimum can find significant cost savings and improve productivity if they undertake a rigorous and comprehensive assessment of their energy use and energy efficiency opportunities. Well led and resourced assessments that measure and analyse energy use at the process and system level, examine productivity factors from an energy perspective and engage staff and management, are providing businesses with additional insights into how they can not only improve their energy productivity but also achieve broader productivity gains across the business.
The first Public Reports from companies participating in the program were released in December 2008 and are available through the EEO website.
Companies reported that they identified more than 7,000 opportunities, representing savings of 60.9 petajoules of energy per year. This is equivalent to 6.5 million tonnes of greenhouse gas emissions, or 1% of Australia’s total emissions. Implementing these savings would also yield $678 million a year in net financial gain for EEO companies.
Halfway through the program’s first cycle, participating companies have assessed 65% of their energy use. More than half of the companies reported they would implement projects that could save more than 2% of the energy they assessed, while 14% propose to implement projects saving more than 10%.
Energy prices are expected to rise in the future, and there is also an increasing need for companies to reduce their carbon footprint and prepare for an emissions trading scheme. It is therefore anticipated that the rigorous assessments of energy use required by the EEO program will continue to be a valuable tool for companies looking to keep costs down, increase productivity, and reduce greenhouse emissions in the most cost effective way.
See the Energy Efficiency Opportunities Case Studies for detailed examples of the benefits of participation.
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2. Program participation and requirementsWhen does my corporation have to register?
Registration applications must be submitted within nine months following the end of the financial year in which the energy use of a corporate group exceeds 0.5 petajoules (PJ). That year is referred to as the trigger year, with the first possible trigger year being 2005-06.
Controlling Corporations whose entire group used more than 0.5 PJ of energy during 2008-09 must apply to be registered for Energy Efficiency Opportunities by 31 March 2010. However, early applications are encouraged to enable participants to proceed with planning and conducting assessments as soon as possible.How does my corporation register?
The Chief Executive Officer or equivalent (or an authorised representative of that officer) of the controlling corporation must apply to register the corporate group with the Department of Resources, Energy and Tourism (RET).
A registration template is available online to assist corporations. Once complete, the template can be posted or emailed to RET.
More information on registration can be found in Chapter Three of the Industry Guidelines.What happens if a corporation doesn't comply with program requirements?
The approach for managing compliance in the first assessment cycle is to:
ensure that all corporations that use more than 0.5 PJ of energy per year register, undertake energy efficiency opportunities assessments, and report on their assessment outcomes and business response encourage cooperative learning, and improvements in conducting effective assessments and publicly reporting on outcomes.
Prosecution for non-compliance is considered a last resort option and would be initiated only in the most serious cases. In most instances a cooperative approach will rectify the situation. If there are minor issues, the Department is willing to work with participants to understand why problems are occurring and what actions are being taken to address these issues.
The Energy Efficiency Opportunities Act 2006 provides that penalties may be imposed if a corporation is found to be non-compliant by a Court. The Court may order a controlling corporation to pay the Australian Government a penalty of up to 1000 penalty units, which is currently a maximum fine of $110,000, per offence.Are government business enterprises covered by the program?
The Energy Efficiency Opportunities program covers constitutional corporations, which means trading, financial and foreign corporations. Constitutional corporations may be either government owned or publicly listed or privately owned. Some government businesses may be trading corporations. Any particular government business wanting to know whether it is covered by the program needs to seek its own legal advice as to whether it is a constitutional corporation.Are suppliers of energy covered by the program?
Companies whose main business is in electricity generation or electricity or natural gas transmission or distribution have been exempt from participating in the Energy Efficiency Opportunities program since it began on 1 July 2006.
The Australian Government recently reviewed this exemption and decided to maintain it for a further four years, until 30 June 2013. In November 2008 and March 2009, the Department of Resources, Energy and Tourism consulted with the public, and potentially affected stakeholders, as part of the review process. Documents relating to these consultation processes are available.
More information about the exemption can be found in Appendix Five of the Industry Guidelines.Are unincorporated joint ventures or partnerships covered by the program?
Unincorporated joint ventures or partnerships are covered by the program. Corporations with an interest in either a joint venture or partnership are given the option to nominate one member of the joint venture or partnership to be the responsible entity for that joint venture or partnership. If a corporation is nominated as the responsible entity for a joint venture or partnership, then that joint venture or partnership is deemed to be a member of that corporation’s group. The nominated entity should have the capacity and skills to conduct an assessment, including the ability to influence energy use.
If joint venturers or partners fail to nominate a responsible entity, the joint venture or partnership must be included as a member of each of the groups to which the joint venturers or partners belong. It is expected that joint ventures and partnerships will nominate a responsible entity to minimise compliance costs.My corporation uses less than 0.5 PJ of energy per year, but we are interested in participating in the program. Can we register?
The Department can not register corporations that use 0.5 PJ of energy per year or less in the program. However, we encourage interested corporations to make use of the Assessment Framework, support material and activities provided as part of the program. Knowledge learned during the program will be communicated widely to business and the community.How will the Department protect commercially sensitive information provided by businesses?
Protecting confidential information is important to the Department. The confidentiality of information provided to the Department under this program is protected by relevant legislation including:
- the Energy Efficiency Opportunities Act 2006
- the Public Service Act 1999
- the Public Service Regulations
- the Privacy Act 1988
- the Crimes Act 1914, as well as the common law.
The Department has a number of measures in place to ensure that confidential information is protected. Measures include procedures and systems for the receipt, management and storage of confidential information and data (whether in electronic or hard copy form), and ongoing measures to check the integrity of systems and to ensure that procedures are being followed.Do I need to conduct one assessment for my entire corporate group or do I need to conduct one assessment for each business unit of my corporate group by June 2010?
The controlling corporation must complete an assessment for each member of the corporations group, business unit, key activity or site of the corporate group, as proposed in their Assessment and Reporting Schedule (ARS), by June 2010 for corporations with a 2007/08 trigger year (June 2011 for 09/10 trigger year etc). The first assessment does not necessarily cover the whole of the group member or business unit. These assessments should include decision-making about energy efficiency opportunities identified in the assessment. An extension to this deadline may be sought in the ARS.
However, this assessment milestone is not to be confused with Government and Public Reporting, which are due at the end of December 2009 for corporations with a 2006/07 trigger year (December 2010 for 07/08 trigger year etc). The requirement for initial assessment milestones was designed to ensure that all corporate groups could learn from completing an initial assessment in the first two years of the assessment cycle. It also gives companies time to prepare their first EEO reports before the submission deadline. The corporation’s Public Report requires Board or equivalent sign off prior to publishing.
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3. Undertaking assessmentsWhat is an opportunity?
An opportunity is any potential change to a system, activity or piece of equipment that:
- is identified during an Energy Efficiency Opportunities assessment
- is consistent with legal requirements such as OH&S
- may result in energy savings projects with payback periods of 4 years or less.
They do not include pre existing energy efficiency projects, or energy savings which result from 'business as usual' production efficiencies. All opportunities identified must be reported even if they are not implemented under the program. See reporting templates for how these should be reported.What does a company need to do in order to say they have completed the assessment?
Section 5.2 of the Industry Guidelines states that an individual assessment is complete once a participant (eg a site, key activity, division, business unit or subsidiary) has completed all six key elements of the Assessment Framework.
This means that companies have brought together the necessary leadership, people and data to analyse energy use and identify energy efficiency opportunities with up to a four year payback. The costs and benefits of these opportunities have been evaluated to an accuracy of ±30%, responsible decision makers have determined what the business response is for each opportunity and this information is communicated to management, relevant staff, and the board of the organisation (see p42-50 of the Industry Guidelines, in particular Key Element 5 - Decision making and Key Element 6 - Communication outcomes).
The information on energy use and opportunities must then be aggregated and developed into both a Public and a Government report (see Section 6.2.2 of the Industry Guidelines for more details). The board reviews and notes the information to be included in the Public Report.My company has identified a cost effective energy efficiency opportunity with a two year payback, but it will actually increase production of greenhouse gas emissions. Would this be allowed under Energy Efficiency Opportunities?
Energy Efficiency Opportunities requires companies to assess their energy use and identify and report on cost effective energy efficiency opportunities with up to a four year payback. It also requires companies to undertake a whole of business cost benefit analysis that includes all quantifiable costs and benefits, not just energy costs and benefits. Some companies are including potential costs of carbon into that analysis.
Finally it is up to the company to make and report on their business decisions on cost effective opportunities. It is not compulsory to implement them. Companies may take the greenhouse impacts of opportunities into account in deciding on implementation, and when reporting can provide additional contextual information for these opportunities where they consider these factors require explanation.
For further information see Key Requirement 4 of the Assessment Framework within the Industry Guidelines.How do you forecast the energy savings for four years out when the energy costs are increasing?
As with any financial estimates, the first step is to assess the expected price increases with the best information available at the time of estimating and reporting on energy opportunities.
If price movements are expected to be smooth over time, a constant average inflation rate can be applied to each future year. Alternatively, an assumed price level can be allocated for payback estimation if price changes are expected in particular years.
Refer to Section 9.2 of the Energy Savings Measurement Guide for a discussion of sensitivity analysis.What is the most appropriate evaluation methodology used by companies - the payback methodology suggested by the program or companies' internal systems such as Net Present Value (NPV) and Internal Rate of Return (IRR)?
The legislation requires that you identify and report all opportunities evaluated with a four year payback or better, with a simple payback calculation defined in the legislation. Therefore the payback evaluation methodology has to be used for all energy efficiency opportunities you identify.
This does not prevent companies using their own evaluation methodologies in business decision making for these opportunities. What is the timeframe in which projects reported as 'to be implemented' need to be implemented?
Once a decision has been made by the decision maker delegated to allocate resources to the implementation of a project, the opportunity can be classified as 'To be implemented'.
While there is no defined timeframe, corporations should be aware that annual Public Reporting updates will demonstrate the commitment of companies to implement opportunities.How do you go about tracking opportunities, including those that might not be viable today but may be viable in the future?
Some companies have developed their own opportunity tracking registers and have incorporated a review date for opportunities that are not viable at present. An example of an opportunities register template can be found in the rear of the Energy Savings Measurement Guide which is adaptable for this purpose.
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4. AccuracyWhat happens if my company does not have access to 24 months of baseline data? Will the accuracy level stay the same?
The collection of 24 months of baseline data is a legislative requirement, as stated in Key Requirement 3.2a of the Assessment Framework of the Industry Guidelines. If it is not possible to collect data for this time period at your site then you need to work with what you have. From a verification perspective, companies would need to justify why a shorter data collection period was chosen and demonstrate the validity and accuracy of the data employed. The accuracy of the baseline data must be within ±5% unless a lower level of accuracy was approved in the Assessment and Reporting Schedule. What accuracy level do we need in forecasting savings?
You need to achieve 30% accuracy for the estimated costs, benefits and energy savings estimated to result from the implementation of each energy efficiency opportunity identified with up to a four year payback. In your Public Report you need to state the accuracy of the forecast savings. There is also scope for voluntary reporting of opportunities that do not achieve the accuracy required by the program.What do you do when you have two different data sets for the same energy source e.g. a gas bill and internal metering?
Where there is significant difference between the data sets investigation should occur into the discrepancies, to ensure the 5% accuracy requirement on energy use is met.
These unexplained energy differences could be the result of leaks, poorly calibrated meters, un-metered energy use etc, so further analysis may be required. By law, energy providers are required to meet stringent levels of accuracy.If we have made an error in calculating our baseline, or reported incorrect information, is there an opportunity to amend this, and if there is, when could we do this?
Significant changes to corporate group structures, baseline energy data, or other significant changes that affect the plans in the ARS, should be reflected in an updated ARS, which may be submitted at the same time that reports to the Department are due. In your annual Public Report there is also scope to update and refine the information you report over time. If you foresee problems in your data you may identify the difficulties and your methodology for calculations in your Public Report. You may also use a disclaimer if you consider that is appropriate.What does the accuracy level in Tables 2.1-2.4 refer to?
The accuracy level refers to the accuracy you achieved when estimating the dollar costs, dollar savings and energy savings that will result from implementation of all the opportunities identified. You determine which table to enter the data by determining the maximum percentage accuracy the corporate group was able to achieve on the costs and savings and energy savings for the particular category of opportunities. You do not have to calculate a combined accuracy of financial costs and benefits and energy savings.
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We have 150 opportunities and we haven't had the resources to investigate all of them to an accuracy of +/- 30% or better. Where do we report opportunities that we haven't assessed to an accuracy of +/- 30% or better?
Table 2.2(A) of the latest Public Report template has been included to allow companies to report opportunities which are yet to be evaluated to an accuracy of ± 30% or better. The Government Report template is currently being reviewed and the same changes will be made to that template in this respect.
Strictly speaking, Corporate Groups are required to evaluate all identified opportunities to an accuracy of ±30% or better. Under these circumstances, the EEO Program expects that over time Corporate Groups will continue to evaluate opportunities and transfer them into the ±30% or better category at the appropriate time. This can be done using Part 2B of the revised Public Report template.
Corporate groups can also voluntarily report to the public on any contextual information which is relevant to assessments (including factors which have influenced accuracy). Refer to the public and government reporting templates for more guidance on reporting formats.What do we do with opportunities that have a payback of more than four years?
Some Corporate Groups have indicated that they have opportunities with payback greater than 4 years that are going to be or have been implemented. They want to know how to report these.
Tables 2.1(A) & (B), 2.2(A) & (B) of the latest Public Report template have been amended to allow for the reporting of opportunities with paybacks greater than 4 years. The Government Report template is currently being reviewed and the same changes will be made to that template in this respect.
Many Corporate Groups continue to track and re-evaluate opportunities with greater than 4 year’s payback. With increasing energy prices, projects that previously had a longer payback now may now be viable. The revised Public Report template provides for updated opportunities reporting in Part 2B.What do we do if an opportunity that had a five year payback at the time it was submitted to management, at the time of Public Reporting now has a four year payback at the time of Public Reporting due to unforeseen increases in energy prices?
Costs and benefits should be calculated with best available information out to four years. Companies should report according to information made and presented to business decision makers at the time the decision was made.
If the details of an opportunity’s information changes ie costs and benefits, this information should be updated in future annual Public Reports.Is there a requirement that the Public Report must align with the Government Report?
Yes, information provided in the Public Report must form part of, and be aligned to, the Government Report. What should be included as an energy efficiency opportunity for reporting purposes under the Energy Efficiency Opportunities legislation?
An energy efficiency opportunity as defined in the Energy Efficiency Opportunities Industry Guidelines (page 9) is:
- Any potential change to a system, activity or piece of equipment identified during an assessment that:
- may result in energy savings projects with payback periods of four years or less ( within an accuracy of +-30%)
- are consistent with legal requirements such as Occupational Health and Safety.
A significant opportunity as defined in the Energy Efficiency Opportunities Regulations (2006) (Part 1, 1.3 Definitions, page 7) means:
- A potential change or modification to equipment, or to a system or activity, that:
- is identified through an energy efficiency opportunities assessment
- the corporation reasonably considers could either:
- result in a material reduction in energy use of a site or process
- result in a material improvement in energy efficiency of a site or process
- generate materially significant financial savings for a site or business.
Knowing what your baseline and forecast energy use is at different production levels is necessary to measuring the estimated and actual energy and financial savings your opportunity provides. The opportunity must result in a reduced amount of energy being used per unit of production/service relative to the energy use per unit of production/service without the opportunity being implemented.
There may be examples of business decisions that have had an impact on energy use but which occurred as a result of the way a business operates during their normal course of business. For example, if a company has improved their energy efficiency or reduced their energy demand as a result of:
- a shut down in part of the plant due to reduced demand;
- the purchase of a new vehicle, building or HVAC system which will be more energy efficient but energy efficiency was not part of the decision making process; or
- increased production which has resulted in less energy being used per unit of production,
These examples would not be considered as opportunities under the Energy Efficiency Opportunities legislation.
Companies may voluntarily report additional information regarding the reduction in energy use or improvements in energy efficiency that have occurred due to other factors but business decisions, outlined in the examples above, should not be included in the mandatory table of results or significant opportunities.
See Energy Savings Measurement Guide for more information.Our site buys energy on behalf of three sites. In terms of reporting, is it the user or the purchaser that reports?
The EEO regulations were changed on 1 July 2008 to allow alignment with definitions under the National Greenhouse and Energy Reporting System (NGER). Under NGER and EEO, responsibility for energy use is attributed to the entity that has operational control over the facility at which energy is used. A corporation is deemed to have operational control where it has the greatest authority to introduce and implement operating, health and safety, and environmental policies.
Alternatively, companies may use the transitional provisions of the amended EEO Regulations that allow responsibility for energy use for the EEO program to be attributed to the entity that is the last purchaser of energy. If companies have chosen this option they will be required to separately report energy use to NGER from 2008-09 on an operational control basis.
For specific advice contact EEO or the Department of Climate Change to discuss your situation in more detail.
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6. VerificationWill we be audited?
The Energy Efficiency Opportunities approach to verification is that every participant will be verified at least once in the first two cycles of the program (10 year period). The current procedure involves a visit by the Department to the head office and to at least one site where an assessment has been conducted. Following the visits, a Report of Findings is produced and issued to the company CEO.
The current approach has been trialled and revised to ensure it is streamlined with NGERS and CPRS audit requirements. The Department is developing a Verification Handbook to help participants prepare for a verification visit detailing what is involved and what to expect. The Handbook will be made available to participants in 2009. There is also a Verification Fact Sheet available on this website.
What record keeping is required? How long should documentation for verification be kept?
The Assessment Framework in the Energy Efficiency Opportunities Industry Guidelines lists the evidence or supporting documentation that the Department suggests should be kept to demonstrate compliance. The legislation requires that evidence must be kept for seven years. How detailed do your opportunities reports need to be and how will this be assessed under verification?
The six Key Elements of the Assessment Framework, detailed in Chapter Five of the Industry Guidelines, give clear detail on the level of rigour and supporting evidence needed in the identification and evaluation of your energy efficiency opportunities. The details of the reporting requirements are set out in the legislation, but the program reporting templates are a good guide to what details are required.
Given that all opportunities with a four year payback or better will need to be publicly reported, together with their level of accuracy, this is an area of focus for verification. It is important to keep all data (on actual and projected energy use, costs, benefits, and energy savings) and the assumptions underpinning calculations of accuracy.
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7. Using consultantsCan you recommend energy consultants or technology suppliers?
The Department of Resources, Energy and Tourism (RET) cannot endorse individual businesses. However, the Department has developed an Energy Services Directory to assist participants in finding skilled personnel.
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8. Other Energy Reporting and Efficiency programsWill reporting to the Energy Efficiency Opportunities program be streamlined with reporting to the National Greenhouse and Energy Reporting System so that companies only need to provide data to the Australian Government once annually?
Yes, this is the intention.
The Energy Efficiency Opportunities Regulations 2006 have been amended from 1 July 2008 to allow streamlined energy use reporting and alignment of responsibility for energy use with the National Greenhouse Energy Reporting (NGER) System. Details of the streamlining amendments are available in guidance material.
The current priority in OSCAR is to provide NGERS functionality for the 2009 NGERS reporting. Streamlined EEO reporting with NGERS through OSCAR is unlikely to be available in the near future.Will the National Greenhouse and Energy Reporting System replace Energy Efficiency Opportunities Public Reporting?
No - The National Greenhouse Energy Reporting System (NGER) does not replace the Energy Efficiency Opportunities Public Reporting obligations. Only the government reporting has been streamlined with NGER. Companies will continue to be required to report annually to the public under the Energy Efficiency Opportunities program. Public Reporting is designed to provide the markets and the general public with useful information which shows that senior management and boards are seriously considering the outcomes of their energy efficiency opportunities assessments and their business response.I have a NSW site that has just completed a DECCW Energy Saving Action Plan and audit. Does this site need to also undertake an Energy Efficiency Opportunities assessment?
Assessments commenced after July 2005 for the NSW Department of Environment, Climate Change and Water (DECCW) Energy Saving Action Plan will be accepted by the Energy Efficiency Opportunities program if they meet the key requirements of the Energy Efficiency Opportunities Assessment Framework. We recommend that participants compare or plan the audit activity undertaken for DECCW against the key requirements of the Energy Efficiency Opportunities Assessment Framework. Where a key requirement is not met, appropriate activities must be undertaken in addition to those already undertaken for the DECCW assessment.
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9. Assistance for participantsAre there any financial incentives for participants?
Energy Efficiency Opportunities does not provide businesses with government funding. However, businesses that participate fully in the program are expected to find cost effective opportunities that will generate financial benefits within their organisation. In addition, some opportunities identified under the program may attract incentives from other State and Federal programs, which may improve their cost effectiveness. As new initiatives become defined EEO will putting together a fact sheet on available funding programs.What support does the Department provide to participants in the Energy Efficiency Opportunities program?
The Department recognises the need to provide information, tools and learning opportunities such as training and seminars to support participants, and those assisting them, to meet the requirements of the program.
A list of resources to support companies undertake assessments and meet program requirements is available on this website.
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10. Technical informationWhat is a petajoule?
The joule is the standard scientific unit for energy. One joule is equivalent to one watt of power radiated or dissipated for one second. A joule is a very small unit of energy and therefore energy is usually measured in kilojoules, megajoules, gigajoules, terajoules or petajoules.
One petajoule (PJ) is 1,000,000,000,000,000 joules ie. 10 to the power 15 joules.
0.5 PJ is equal to 500 terajoules (TJ) or 500,000 gigajoules (GJ).
One petajoule, or 280 gigawatt hours, is the energy content of about 43,000 tonnes of black coal or 29 million litres of petrol.
1 million cubic metres of natural gas equals 31.65 terajoule, 1 petajoule = 1000/31.65 = 31.60 million cubic metres. This value is a standard conversion unit because the actual amount of heat produced by natural gas fluctuates.
Electricity: 1 million kWh = 3.6 terajoule (TJ), or 1 petajoule = 1000/3.6 = 277.77 million kWh. There are many types of coal with different energy content and the heating power varies in the range of 27 - 29 GJ/million kg.
0.5 PJ of energy per year is broadly equivalent to either:
- 139,000 megawatt hours of energy
- 9000 tonnes of LNG or 10,000 tonnes of LPG
- 13 megalitre of diesel
- Spending $6-11 million on electricity, $3-4 Million on gas or $18-21 million on diesel (depending on prices).
The energy contents of various fuels and corresponding greenhouse gas emissions factors are provided in the National Greenhouse Accounts (NGA) Factors document, available from the Department of Climate Change website.Do I need to count the energy in oxygen?
No - The listing of oxygen as an energy source in the Industry Guidelines is an error. Oxygen is not listed in the Regulations as an energy source and therefore is not to be counted as an energy source under Energy Efficiency Opportunities. This error will be corrected when the guidelines are revised.Is renewable energy counted in Energy Efficiency Opportunities as an energy source?
Yes – Electricity from renewable resources is included as are renewable resources such as bagasse or other forms of biomass that are combusted and used as an energy source.
Energy Efficiency Opportunities aims to improve large energy using companies' understanding and productive use of energy. It is important to be efficient with all forms of energy. Many forms of renewable energy used by business utilise energy resources to capture and transmit that energy. Other forms of renewable energy such as biomass can be combusted more or less efficiently and as such generate greater or lesser emissions. Maximising our efficient use of renewable and non renewable energy reduces energy costs, unnecessary demand on energy infrastructure as well as reducing greenhouse gas emissions.
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