The Victorian government has disappointed sustainability advocates with a soft approach on ridding the state of its massive reliance on gas.
This at a time when the entire eastern seaboard is flailing under crushing price rises for gas that’s forcing some businesses to the wall, and with most of the super profits going to the mostly offshore gas industry owners. If Daniel Andrews was planning on a strategy to not upset the apple cart before the November election he faces, this is probably a serious misstep.
After three reports relating to the gas transition Victoria has focused on green hydrogen and other low emissions alternatives, along with voluntary programs to encourage buildings to go all-electric.
The state flags it will amend its planning codes so that people who want all-electric homes will no longer be forced to connect to the gas network regardless, and it will provide subsidies to people switching gas appliances to electric ones. So there are some positives in the plan.
But the policies stop short of mandating that all new Victorian homes should be all-electric, or planning to systematically transition existing buildings to all-electric. Instead, the policy says the decision to go all-electric will be a “choice” for homeowners.
It’s not too hard to read the tea leaves here: reports are that the gas industry has pulled out all stops to keep itself as viable as long as possible, and that it’s applied significant pressure to the Victorian government to slow down the gas-free transition – in much the same way the coal industry has fought tooth and nail to halt decarbonisation of the economy.
The high prices paid by Australian consumers and businesses now are planned, and part of an orderly strategy to maximise profits for mainly foreign owners in the industry at the expense of the domestic market.
In a blistering attack on the industry Richard Denniss, chief economist of The Australia Institute points out in a recent article in The Monthly that it’s ploughed $80 billion into infrastructure to make sure it can sell gas offshore and as you’d expect it will pull out all stops to make sure this happens.
Government agencies also failed to ensure that local needs were met first. Instead Australians were told that for lower prices we needed more supply. Not true.
“For decades, Australians were told that if we fracked more farmland and mined more coal we would have cheap reliable energy, and this winter the big lie has been revealed. Ironically, until 2016 [before the $80 billion investment in export facilities] Australians could already rely on relatively cheap gas to heat their homes and fuel their factories,” Denniss says.
Sustainability experts are disappointed, but regardless, the gas industry claims that allowing Victorians go all-electric for their cooking and heating needs will be too expensive. It’s not.
Recent gas price hikes ought to be a stunning piece of evidence to the contrary.
But some see that the Victorian government is doing the best it can under the circumstances.
Jono La Nauze, chief executive of Environment Victoria said that, despite reports the gas lobby had pressed the government to shelve the Gas Substutution Roadmap, the fact it has been released represents genuine progress.
But, given the Andrews government’s claims about supporting action on climate change, the lack of policy ambition around making Victoria gas-free is disappointing.
“With Victorians already facing extreme gas prices and the recent strong vote for climate action at the federal election, we had hoped and expected the Victorian government to go further towards ending our state’s gas dependence,” 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 Twelve Apostles and giant gas tankers in Port Phillip Bay.”
Three inquiries completed and out and about in force
Victoria ran three separate inquiries that looked at how the state should transition off so-called “natural” gas but which is actually toxic methane.
On Saturday, DEWLP (Department of Environment, Land, Water and Planning) released the Gas Substitution Roadmap, which looked at ways to reduce carbon emissions from methane gas in homes and industry.
This was followed by Infrastructure Victoria on Monday, whose Towards 2050: Gas infrastructure in a net zero emissions economy report dealt with the infrastructure the state would need to replace methane gas.
The third, which wrapped up in May and was run by the state’s upper house’s Environment and Planning Committee, examined renewable energy in Victoria. The state government will have to respond to its recommendations within the next six months.
The release of the policies came despite suggestions the Andrews government was likely to shelve them to avoid a fight with the gas industry ahead of the state election in November.
What do the policies say?
Among the wins for homeowners and developers who support building electrification, is that the Victoria Planning Provisions will be updated so that people wanting all-electric homes will no longer be forced to connect them to the gas grid.
The other good news is that the existing Victorian Energy Upgrades (VEU) program will expand to provide subsidies for replacing gas water systems and space heaters with electric appliances. All incentives for all residential gas products will be phased out by late 2023.
However, this policy stops short of including a moratorium on new gas connections, or mandating that all new homes only use electric appliances. Instead, it will rely on public education campaigns that “target households in winter”, which will “explain the practicalities and benefits of reducing or switching away from gas”.
“These changes are all about providing greater choice – there are no penalties for people who continue to use gas, just advice, options and support for those who want to make the change. Because we know households and businesses make these decisions every day as they build or renovate homes, or replace old appliances,” the roadmap states.
Meanwhile, the Infrastructure Victoria policy calls on the state to encourage building electrification by removing barriers to all-electric developments and reviewing the use of gas across all state government buildings.
However, the use of gas is still very much the focus of this policy. It calls on the state to repurpose existing upstream gas assets and facilities, while scaling up production of biogas, biomethane and green hydrogen.
“Victoria will need to use a much lower amount of natural gas to reach net zero. But it will not happen quickly. Victoria’s electricity sector must decarbonise further, as it is currently more carbon intensive than natural gas and is forecast to remain so until the mid-2030s,” the policy states.
“The existing gas network will be needed for at least the next 10 years. Beyond that, no single low or zero emissions gas is likely to provide the sole solution for Victoria. Several different types of alternative gases – including biomethane and potentially hydrogen – will be needed to replace some natural gas, with an increased role for electricity.”
The broader context
The timing of these reports is not good. They occur at atime when there’s been massive price surge on gas along the east coast. The gas industry has blamed this on a shortage that can only be overcome by more drilling and fracking.
The Australia Institute’s chief economist Richard Denniss, says in his article in the The Monthly that the huge prices rises were completely expected and occurred while as gas production rose almost 300 per cent in recent decades. In fact the high prices are because of the industry’s strategic plans to sell most of Australia’s gas offshore.
The industry invested $80 billion into gas export infrastructure in Gladstone in Far North Queensland to make this happen so you can be certain the foreign owners who dominate the industry will want their money back – and then some.
“For decades, Australians were told that if we fracked more farmland and mined more coal we would have cheap reliable energy, and this winter the big lie has been revealed. Ironically, until 2016 Australians could already rely on relatively cheap gas to heat their homes and fuel their factories,” Denniss says.
Before this $80 billion spend on enormous refrigerators in Gladstone to cool and compress liquified natural gas, all gas drilled on the east coast had to be sold to local households and businesses, regardless of what overseas customers were willing to pay.
“Now the Australian gas industry, which is actually 95 per cent foreign-owned, can sell our gas overseas at the world price rather than to Australians at the cost of production.”
Gaslighting from the gas industry
Not surprisingly gas industry lobby group Energy Networks Australia criticised even the watered down version of Victoria’s policy to encourage all-electric homes.
It called for the state to switch to a blend of hydrogen and methane gas in the short term and hydrogen in the longer term. However, it neglected to specify hydrogen should be green (made from renewables), rather than grey or blue hydrogen (created using fossil fuels).
“Seventy 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,” Energy Networks Australia Acting chief executive Tamatha Smith said.
Shame too that the Gas Substitution Roadmap contradicts Ms Smith.
Instead there’s around $1250 in savings for consumers.
“For example, an existing detached dual-fuel home with rooftop solar photovoltaic (PV) that moves from using gas for heating, hot water and cooking to using efficient electric appliances could reduce its average energy bill by around $1250 per year,” the report said.
“For a household without solar, going all-electric could save around $1020.”
– with Andrew Sadauskas