By Broede Carmody, Mike Foley and Lachlan Abbott
Energy experts are urging Victoria to take extra steps to accelerate the removal of gas heaters and cooktops from homes, after the state announced a ban on gas connections to new homes.
Switching the two million homes in Victoria already connected to gas over to electricity will reduce the state’s emissions in the long term, but in the short term it will drive an increase as more homes rely on the state’s coal-fired power plants until renewable energy takes over.
Energy Minister Lily D’Ambrosio and Planning Minister Sonya Kilkenny revealed on Friday that all new developments would be banned from connecting to gas from January 1.
The changes apply to all homes, subdivisions and knock-down rebuilds that require a planning permit from that date. Under the plan, the new dwellings will have to be fitted with electric or induction stove tops instead of gas appliances. Solar or electric hot water systems will also have to be used instead of gas heating.
But energy transmission experts say the government will need programs to drive change faster. Currently, even if 270 dwellings were switched from gas to electricity every single day, it would take 20 years to remove all the gas connections in Victoria.
Victoria is the biggest residential gas user in Australia, with homes typically using the fossil fuel for cooking and heating. In other parts of the country, gas is often used only for cooking.
Grattan Institute climate change and energy program director Tony Wood said Friday’s announcement was just the first step.
“We’ve got five million households in Australia [connected to gas]. More than two million in Victoria. We’ve got to start now,” he said.
“We need to provide the support programs. Plumbers and gas fitters have to be all on board with this so when your gas hot water system blows up, they replace it with an electric one.”
Professor of climate change and energy policy at the Australian National University, Frank Jotzo, said it was “absolutely necessary” for Victoria to accelerate the phase-out of gas to meet its emission reduction targets.
“It is usually, for governments, very difficult to mandate the phasing out of existing appliances,” he said. “It’s easier to intervene in what sort of new appliances are allowed to be installed.”
Associate Professor Joe Hurley, from RMIT’s Centre for Urban Research, said existing gas appliances were a “big challenge” for governments committing to net zero. But he said he couldn’t see the Victorian government banning existing gas connections any time soon.
“You might see a move to more mechanisms to discourage the replacement of existing gas appliances with new gas appliances. That’ll be the next step,” Hurley said.
He said additional incentives to help households make the switch to electric should occur, but those policies should be carefully calibrated to ensure taxpayer funds aren’t feeding “middle-class welfare”.
The Victorian government last year removed the requirement for new homes to be connected to gas.
On Friday, D’Ambrosio said banning it entirely would help reduce Victoria’s emissions and eventually provide cost-of-living relief given gas prices skyrocketed over the past year and there was a looming winter shortfall on the eastern seaboard.
“Other states may have shied away from dealing with this challenge. We haven’t,” D’Ambrosio said.
The ACT last month passed a bill banning new gas network connections.
Energy and Resources Minister Lily Ambrosio announcing Victoria’s gas connection ban on Friday.Credit: Joe Armao
The Victorian government estimates the change will save residents up to $1000 on their annual energy bills. D’Ambrosio said government modelling used to calculate that figure was supported by a recent Grattan Institute report.
Wood, who authored the report, said he expected Victorians to save money, but said it remained to be seen if the state government’s $1000 claim stacked up.
“It depends on what your appliances are, what choices you’re facing,” he said. “But there’s no question consumers are going to save money. It’s probably only now a matter of how much.”
He also pointed out that Victoria’s electricity grid was still largely dominated by coal.
“So that means if you switch from gas to electricity today, in the medium term, you’re not going to improve Victoria’s emissions. But in the next few years you will.”
Under Victoria’s plan, new government buildings – such as hospitals, schools and police stations – will only be powered by electricity.
The announcement comes a day after the state government tabled its overdue response to the renewable energy inquiry held during the last term of parliament.
That inquiry, which handed down its recommendations in May 2022, suggested the government “consider enacting a moratorium on new residential gas connections”. In its reply, which was due in September last year, the government said it supported the recommendation in principle.
The gas sector contributes about 17 per cent of Victoria’s emissions, and the energy minister said the gas ban from new homes was a key part of the government’s plan to reduce Victoria’s emissions by 75 to 80 per cent by 2035 and reach net zero by 2045.
“This is a journey. It’s not going to happen overnight. And gas will still be a feature of residential living for a number of years to come,” D’Ambrosio said.
The government will also spend $10 million on a new residential electrification grant program for volume builders, developers and others to provide rebates for solar panels, solar hot water and heat pumps to new home buyers.
Another $1 million will be spent on a training program to help the construction industry adapt to new renewable energy requirements in homes.
The planning minister said when a gas-connected home was knocked down and rebuilt, the new home could not stay connected to gas if a planning permit was required for the rebuild.
Deputy leader of the Greens in Victoria, Ellen Sandell, said the party had been calling for a ban on new gas connections for years.
“But it is strange that Labor acknowledges gas is an expensive, polluting fossil fuel on the one hand, while on the other hand is changing the law to make it easier to open new mines and is approving new gas drilling across the state, including near the Twelve Apostles,” she said.
A worker repairs drilling pipes on a site in the Cooper Basin region in South Australia.Credit: Brendan Esposito
Master Builders Victoria chief executive Michaela Lihou supported the decision to move away from gas.
“Creating a pathway to a cleaner and more sustainable future is a big part of our vision for the Victorian building and construction industry,” Lihou said.
The Property Council’s national policy director, Frankie Muskovic, said the announcement provided certainty.
“Every new building built with gas will need to be retrofitted in the future, so we welcome this move from the Victorian government to avoid investment in new gas network infrastructure and focus on reducing energy bills and providing cleaner, healthier homes for Victorians,” she said.
But shadow treasurer Brad Rowswell described Friday’s announcement as “desperate policy on the run”.
“We do need an orderly energy transition from our current circumstance to the ways of the future,” he said.
“I don’t think that this decision today will actually lead to lower energy prices. I think that is a furphy by the minister and I think Victorians are not mugs and they recognise that as well.”
The Australian Petroleum Production and Exploration Association, which represents the oil and gas industry, said the state government was removing consumer choice for limited climate benefit.
“The best way to avoid shortfalls and put downward pressure on prices is to bring on new gas supply close to where it is used because the cheapest gas is the gas closest to the customer,” chief executive Samantha McCulloch said.
“We need to ensure policy is based on robust, evidence-based analysis that recognises the importance of gas in supporting the transition of our energy system to net zero.”
Victoria will release an updated gas substitution road map later this year.
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