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Businesses taking action to improve energy efficiency, but investment still modest

Patrick Stafford 16 July 2012

Two-thirds of businesses have started making improvements to their energy efficiency in order to cut costs, according to a new survey from Australian Industry Group – but the employer advocacy organisation says more can be done.

Tenant Reed, principle national advisor public policy at AIG, says while three quarters of respondents are planning to take action, or have taken action already, they only involve “modest” investment.

Many businesses have also said they don’t expect to see any sort of benefit for another three years.

“Businesses are managing a lot of costs, and those who are in the category of really high energy users – about a quarter – are going to have so many other things they could apply their limited capital to.”

“What we’ve found is that there is a lot of consciousness of energy costs, but that doesn’t necessarily make it something they’re going to work on – particularly because of that long lead time.”

“If they’re being ambitious, they can perhaps see something done within the next three years.”

The survey, which received responses from more than 300 businesses across all sectors of the economy, found expenditure on energy as a percentage of turnover increased by 10% between 2008 and 2011.

Taking into account predictions for electricity prices, the AIG says business spend on energy will grow in “both absolute and relative importance”. For instance, currently 46% of businesses spend less than 1% of turnover on energy, 27% spend 1-2% and 26% spend more than 2%.

“These impacts will be compounded by the challenging conditions facing many non-resource businesses, with costs rising and with revenue and profit margins being squeezed,” the AIG says.

Reed says the figures also show many businesses haven’t seen a significant improvement just yet. Overall, a third of businesses which said they had made an improvement have only recorded a 1-2% increase in efficiency.

Another third haven’t made any improvements at all, while another third recorded improvements above 1-2%.

But the more troubling finding is that 25% of businesses said they haven’t yet taken action and don’t plan to do so.

“Those who had done things were continuing to do things, but there is still a long way to go,” he says, noting businesses should do as much as they can to increase investment within their financial viability and seek out government assistance.

“We asked questions about the attractiveness and policy, and we found many would take advantage of programs if they knew they were available.”