Media Release 16/1/4

From Clive Blanchard, Director, COOLMAX PTY LTD

Phone 08 8354 1062

SUBJECT: AIR CONDITIONER LEVY COULD BOOST ALTERNATIVE COOLING TECHNOLOGIES

Jeff Angel from the Total Environment Centre (TEC) http://www.tec.org.au/index.php?option=com_content&task=view&id=187&Itemid=329 has proposed a levy of $100 per $1000 of air conditioner cost in a bid to slow the surging demand for electricity.

AREMA's Rod King criticised this proposal in the November issue of CCN (Climate Control News published by Yaffa Publishing) but he has missed the point. I think the idea of a levy needs to be explored further before being rejected. The problem is that the decision to purchase an air conditioner is a commitment to pay the running costs for the next 15 or 20 years. It also commits the electricity supply organisations to invest in generation and distribution infrastructure to supply the air conditioner with electricity. I think that many people make the decision to buy an air conditioner without a full realisation of the cost, energy, and environmental implications of that decision. If people took the full implications into account when making an air conditioning decision there would be no suggestion of a levy. The problem is that due to a mixture of lack of knowledge and short term thinking, most purchasers do not fully take into account the electricity costs they are committing themselves to. This is illustrated by the fact that I have replaced perfectly good air conditioners with a wall or window evaporative cooler, because the owner couldn't afford to run the original air conditioner.

I would like to address the points raised by Rod King.

Raising the price of air conditioners relative to low energy use alternatives like evaporative cooling or other low energy technologies will improve the attractiveness of the alternatives, particularly in climates that are suited to them. Australia wide about 8 million people live in climates suited to evaporative cooling for example and this can reduce peak demand by up to 90%. Currently many of the alternative technologies are only produced in small quantities as they are emerging technologies. This puts them at a cost disadvantage compared to refrigerative air conditioners, which are manufactured by the millions.

Since air conditioners are up to 70% of household energy use in South Australia on an extreme day (Monica Oliphant http://www.ccsa.asn.au/CoolComms/Workshop/Oliphant.htm ), and similar trends are emerging in other states, we can hardly claim that we are being made a scapegoat. We are the biggest problem. However Jeff Angel from the Total Environment Centre (TEC) is not claiming that we are the only industry that needs a policy change and a levy on air conditioners would be one among a range of policy initiatives.

Although there are practical issues about such a levy, I don't think they are insurmountable. If we have the will, we will find the way. As far as equity is concerned, the TEC proposal available on their website, suggests a $100 levy for every $1000 of A/C unit cost. As this would not change the relativities of refrigerative air conditioning prices, I don't see this as an equity problem, particularly when lower running cost alternatives are available.

The whole point of the proposal is to raise the price of refrigerative air conditioning relative to alternatives, to increase the number of people who choose alternatives. This will most definitely reduce peak demand.

The point is that this proposal is aimed at both peak demand and energy use. Although action needs to be taken (and is being taken) to address standby losses in appliances, this doesn't mean that our industry should be exempt from taking action.

I completely agree with Rod King that we need to improve building design, but again action is being taken on that front, and again that doesn't mean we shouldn't encourage alternatives to refrigerative air conditioners.

In conclusion an appropriately designed levy on air conditioners will greatly alleviate the problems faced by electricity producers, and in some areas, particularly inland Australia and the Southern Coasts, could make a dramatic difference.

END