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Australia’s first Gas Substitution Roadmap has been announced by the Victorian Government as an outline to reduce energy bills and further reliable energy supply for the state. 

The roadmap outlines how Victoria will use energy efficiency, electrification, hydrogen and biomethane to drive down bills and cut carbon emissions, as well as giving households and businesses more choice to cut their bills and their emissions – helping more people upgrade to efficient appliances and take advantage of electrification.

According to the roadmap, Victorian households can save up to $1,020 per year off their energy bills through electrification and up to $1,250 if solar panels are installed. Victorian businesses can save thousands of dollars by switching to electric appliances.

Households can also now claim a $250 Power Saving Bonus by heading to the Victorian Energy Compare website and comparing their current energy bills to see if they can get a better deal.

New incentives to help Victorians move away from gas will be developed as part of the Victorian Energy Upgrades program. Incentives for all residential gas products will be phased out in 2023.

The Victorian Government said that the Victorian Energy Upgrades program has already helped more than two million households and businesses cut their bills by increasing energy efficiency.

Victorians will also be given more choice by removing barriers to all-electric homes and new developments, by removing the current planning scheme requirement for new developments to be connected to gas.

An all-electric new home with solar panels can have electricity bills as low as $850 a year. This can drop even further if a battery is also installed, and is significantly lower than the average annual energy bill of $2,660 for a new home with gas and electricity.

In addition, the roadmap outlines a clear path to transitioning to using hydrogen and biomethane, providing industry with the certainty needed to secure investment, while reskilling and preparing the Victorian workforce to take up new exciting sustainable employment opportunities.

The roadmap was shaped by extensive community consultation with Victorian consumers, businesses, industry bodies and advocacy groups, regulators and energy market participants.

Victorian Minister for Energy, Lily D’Ambrosio said the roadmap was released at the right time. 

“Gas is no longer the cheap fuel it once was – we know renewables are the cheapest form of energy and we’re making it easier for Victorian households and businesses to go all electric with more choice and more support,” Ms D’Ambrosio said.

“Victorians have been at the mercy of private gas companies for too long, it’s time to put gas on the back-burner as we help Victorians cut energy bills and halve emissions by 2030.”

Push for a gas-free Victoria

CEO of Environment Victoria, Jono La Nauze, said the roadmap will be a step towards ending Victoria’s dependence on “expensive, polluting gas but lacks urgency and leaves a lot of work to be done”. 

“We welcome the fact that the government will no longer force millions of Victorians to use gas and provide greater support for people to shift to all electric homes to do so – but that really is just the bare minimum,” Mr La Nauze said.

Mr La Nauze said the roadmap marks “genuine progress” but misses a larger vision for a gas-free Victoria.

“Following the momentum from the strong vote for climate action at the recent federal election, Victorians will expect more decisive, timelined plans to rapidly shift to 100 per cent renewables at the November Victorian election,” Mr La Nauze said. 

“Alarmingly, this roadmap lacks clear goals and timelines and fails to rule out the potential use of dirty fossil hydrogen. A slower transition will leave Victorians vulnerable to drilling under the 12 apostles and giant gas tankers in Port Phillip bay. 

Environment Victoria urged the State Government to “seize this opportunity with greater confidence and vision”.

Overall, Environment Victoria found positive measures outlined in the roadmap, including:

  • The removal of  “antiquated” requirements that forced developers and homeowners to pipe gas into their homes, ending decades of subsidy for the gas industry
  • The roadmap stopped short of banning new connections which means the State Government is washing its hands of responsibility for ending the growth in gas connections and leaving the decision to big property developers
  • The shift to the seven-star construction code and removal of plumbing regulations that incentivised gas hot water
  • The new and improved support for household electrification through an overhauled Victorian Energy Upgrades Program

However, for Environment Victoria, the gas substitution roadmap falls short of expectations in the following ways:

  • A lack of clear goals and timelines which fails to rule out the potential use of fossil hydrogen. Gas is responsible for 17 per cent of Victoria’s climate pollution and the roadmap announcement provides little clarity about when and how that will be eliminated 
  • There is very little good news  for low-income households bearing the brunt of gas industry greed. Renters in particular who are already doing it tough this winter are left highly exposed
  • The roadmap should have included a major and urgent investment in electrification across Victoria, coupled with support to develop local clean industries so we can heat our homes with locally made heaters and hot water services

Decarbonising the gas sector

The Australian Gas Infrastructure Group (AGIG), one of the country’s largest gas infrastructure businesses, welcomed the recognition of the need to accelerate decarbonising the gas sector.

AGIG said the State Government’s approach aligned with AGIG’s own Low Carbon Vision, which targets 100 per cent renewable gas by no later than 2050.

In particular, AGIG said it supports the Victorian Government’s consideration of a renewable gas scheme and renewable gas targets to drive investment, as “key to delivering a balanced, stable and affordable low carbon transition for Victorian”.

However, in line with Environment Australia’s view, AGIG said clear direction and concrete support is needed as a priority so renewable gas can scale up in order to decarbonise the sector effectively.

AGIG CEO, Craig de Laine, said decades of policy and funding support have “spurred the development of the renewable electricity sector and similar support is needed now and beyond 2023 to drive Victoria’s renewable gas future”.

Any incentives to shift off gas will most likely increase emissions in the near term because heating load is generally in the morning and evenings when rooftop solar is not available and the alternative is coal-generated mains electricity.

“Victoria should learn from its success in deploying renewable electricity and address the policy imbalance by setting clear targets for renewable gas delivery in Victoria, which will drive decarbonisation of domestic gas use, transport, and electricity,” Mr de Laine said.

AGIG also announced a strong opposition to any policies that remove customer choice and threaten the diversity and security of Victorian energy supplies. AGIG said customers should be able to make their own decision on their energy sources.

Maintaining diversity and customer choice is key to a low risk, low cost and stable decarbonisation pathway.

Finding the right mix

Energy Networks Australia Acting CEO, Tamatha Smith, said roadmap should allow for all options to be explored to support renewable gas development or customers could end up paying more.

“70 per cent of Victorians rely on gas for heating and cooking. Meeting all this demand with electricity instead would be extremely difficult to achieve and more expensive for customers,” Ms Smith said.

“In fact, the Gas Vision 2050 – Delivering a clean energy future report demonstrates that net-zero emissions can be reached with hydrogen at half the cost of electrification.

“The best and least-cost way to achieve net-zero is to repurpose the existing gas pipelines and networks that supply these homes to provide clean renewable hydrogen and biomethane and develop our renewable electricity grid.”

Ms Smith said the size of the energy transformation demanded a mix of solutions including electrification and renewable gas.

“This gives us diversity of energy supply – so we can ride through droughts in renewable generation – and retains customer choice,” Ms Smith said.

“The challenge is to find the right mix of these solutions to reach net-zero emissions in a way that ensures the reliability and security of our energy system and minimises costs to customers.”

 A “no regrets” strategy

The Clean Energy Council (CEC) said the Victorian Government was “on the money” with its roadmap, but urged a faster timeline.  

Electrification can deliver real and substantial savings to households, representing a more energy-efficient solution for space heating, water heating and cooking, said the CEC. 

Clean Energy Council Policy Director for Electrification and Hydrogen, Anna Freeman, said the Victorian Government’s leadership on rooftop solar and batteries through its $1.3 billion Solar Homes Program gives it a head start on electrification, which the state should leverage.

“Governments have a vital role to play in helping households to make the switch to more efficient electric appliances, both through incentives and public education and awareness,” Ms Freeman said. 

Energy efficiency measures and the direct electrification of households and business is a no-regrets strategy for Victoria, which can cut bills, reduce emissions and create more jobs. Implementation of this strategy should be clearly communicated and implemented without delay.

The CEC also welcomed the announcement that the Victorian Government will begin work to develop a market mechanism that can stimulate demand for green gas/fuels to assist these fledgling sectors in scaling up.

“Project proponents need demand for green gas to help them get their projects off the ground. A Renewable Gas Target could help these projects get out of the starting blocks. It’s important that it is designed to support the most cost-effective deployment of hydrogen and other renewable fuels in the economy and not to delay the transition to electrification,” Ms Freeman said. 

Further information on the Roadmap is available here.

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