27 Sep 2012

New laws bring greater scrutiny of products' energy efficiency

by Brendan Bateman, Trisha Cashmere

All models of product that fall under the Greenhouse and Energy Minimum Standards Act must be registered to make sure that they comply with the relevant GEMS determinations.

The drive for energy efficiency is nothing new and there has been work over many years to improve our performance in this area for various reasons including energy security, economic efficiency and greenhouse gas reduction.

Last week there was a large leap forward when the Federal Parliament passed the Greenhouse and Energy Minimum Standards Act 2012. The Act's purpose is to promote the development and adoption of products to reduce energy use and greenhouse gas production by applying Greenhouse and Energy Minimum Standards (GEMS) in association with the supply and commercial use of products that use energy, or affect the energy used by another product.

A wide range of products will be affected, as the changes expand the current scheme beyond products such as industrial and domestic heating and refrigeration, and ordinary household whitegoods and electronics, to include building supplies such as piping, glass, and insulation, and more energy sources.

What does this Act do that the Energy Efficiency Program doesn't already do?

In 1992 the Energy Efficiency Program (E3) was established to co-ordinate energy efficiency activities. The E3 scheme operates on a national basis through co-operative action by the Territory and State governments, and with New Zealand. The challenges include relatively high compliance costs and complexity because of the different approaches.

The Act is intended to address these inconsistencies. It also seeks to expand the program to drive further efficiency by including more energy sources such diesel and gas, and also extend to products that impact on energy use such as insulation and glass. The program will continue to operate on a trans-Tasman basis though it is noted that there are some inconsistencies between the New Zealand and Australian schemes.

What are GEMS determinations and how do they affect products?

GEMS determinations set standards for particular products, such as minimum standards of performance in relation to energy use or emissions intensity or other criteria that may be identified in the regulations.

Generally speaking an appliance or piece of equipment covered by the legislation can only be supplied or offered for supply, or used for a commercial purpose, if:

  • the model of the product is registered under this Act;
  • the product complies with the GEMS determination; and
  • supply, offer or use of the product complies with the GEMS determination.

Generally, all models of product that fall under this legislative scheme will be registered to make sure that they comply with the relevant determinations. A senior officer of the Department of Climate Change and Energy Efficiency will be responsible for the registration system and more broadly the administration of this Act and will be known as the GEMS Regulator.

Inspectors appointed under the Act will monitor compliance with the rules about supply and the commercial use of products.

What if you don't comply with the Act?

Failure to comply with this Act may result in prosecution for an offence or exposure to a liability for a civil penalty. The details of offences may be published. Decisions under this Act may be appealed internally and then to the Administrative Appeals Tribunal. The Act includes protections against the use of commercially sensitive information.

Important points to note

  • The Act may operate concurrently with State or Territory legislation and where the State or Territory standards are more stringent than those specified in the GEMS determination, the more stringent standards will apply.
  • Products that are deemed to have a higher impact on energy use or greenhouse gas production attract higher penalty levels where there are contraventions of the Act.
  • The Act takes a very broad view of supply and includes sale, exchange, gift, lease, loan, hire or hire-purchase, and it is irrelevant whether the supply is for consideration or for wholesale or retail supply.
  • The Act is intended to commence operation on 1 October 2012, or when it receives Royal Assent.

The expanded program will ensure that Australian governments can continue to encourage the development of energy efficient products that meet the needs of Australian households and businesses. Whether or not the stated intention of reducing the complexity of compliance for Australian business will be achieved is yet to be seen.

For further information in relation to this scheme please do not hesitate to contact us.


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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.