Deputy Premier and Energy Minister Eric Ripper said Government had to lead by example in the fight to protect the environment.

Launching the Energy Smart Government program, Mr Ripper said he expected more than 50 agencies to reduce their energy consumption by five per cent in 2002-03, and then 12 per cent in five years.

"By 2006-07, we expect emissions to fall by 54,000 tonnes a year, equivalent to the environmental benefit of removing 12,000 cars from the road or planting 4.3 million pine trees," he said.

"The Government has committed $16 million through the Sustainable Energy Development Office to offer interest-free loans to agencies wanting to fund energy conservation initiatives."

The Deputy Premier added that the new initiative would stimulate jobs and support local sustainable energy industries.

Mr Ripper also said agencies that failed to meet the targets without good reason would face financial penalties.

"On the latest figures available, Government generates 448,000 tonnes of greenhouse gases a year and spends well over $60 million to meet its energy bills," he said.

"Cutting emissions not only benefits the environment but it saves money that can be put to good use delivering services for the community."

The Energy Smart program also involved an annual report to Parliament on energy consumption across Government and procurement policies for equipment, accommodation and other facilities to deliver energy savings.

Mr Ripper said Government agencies consumed around 615 gigawatt hours of energy each year for lighting, heating, cooling and powering office equipment, such as personal computers.

"Audits will be conducted to ensure agencies are taking every step possible to reduce energy consumption and meet their greenhouse gas reduction targets," he said.

The Energy Smart program was launched at Dumas House in West Perth, a pilot project for energy efficiency initiatives.

Built in 1964, the building was designed to use natural light and heat from the sun and had overhanging eaves to provide shade.

"While Dumas House was at the forefront of energy efficiency in its day, with a combination of good housekeeping and some capital investment - including window tinting and the installation of high efficiency tube lighting - significant energy savings can be achieved," Mr Ripper said.

The Energy Smart scheme imposed mandatory energy reduction targets of 5% in 2002-03, 6% in 2003-04, 8% in 2004-05, 10% in 2005-06 and 12 % in 2006-07.

Mr Ripper said he expected other Government workplaces to follow suit - such as Silver City in Royal Street, East Perth; the Police Department building near the causeway; and the Department of Land Administration in Morrison Road, Midland.