By Kieran Rooney and Rachel Eddie
A pledge to fast-track gas projects, while outlawing the fuel in new builds and restricting its use, has raised questions about the Allan government’s energy strategy, and accusations of sending mixed signals over the planned transition from fossil fuels.
Gas use has emerged as a thorny political problem for Labor as it seeks to balance its environmental credentials with criticisms that going too far with electrification would hurt households battered by the rising cost of living.
Gas connections on new builds have been banned for homes that require a planning permit.Credit: Bloomberg
Premier Jacinta Allan announced on Tuesday that her government would fast-track gas projects – including extraction, storage and imports – via smoother planning to ensure reliable supply.
Businesses had previously warned they might leave the state amid a looming shortfall and rising gas prices. But as the industry grapples with the effects of the much-touted electrification program, the government has altered its language to say gas has a role in the energy transition and for business.
The change in language can be traced to a forum held by the Victorian Chamber of Commerce and Industry in which chief executive Paul Guerra urged attendees to “call out the bullshit and call out the ideology”.
Three industry sources who requested anonymity to detail a private discussion said that in a meeting at that event, the sector warned government representatives that energy costs and uncertainty about gas were creating major economic headwinds.
Since then, they said, the Allan government had put a greater emphasis on using gas for electricity generation as coal-fired power stations come offline and as a reliable fuel source for businesses until more renewable forms are available.
At the same time, gas connections on new builds have been banned for homes that require a planning permit, and changes to rental standards that would have enforced stricter energy-efficiency rules and pushed out gas appliances were due by the end of the year. However, these were pushed into the new year for further consultation.
The state is also about to release a regulatory impact statement that examines mandating that households replace gas appliances with electric ones when they reach their end of life. Cooktops will be excluded from this process.
The Australian Industry Group’s Victorian head, Tim Piper, said residents switching off gas would put cost pressure on businesses that needed to continue using the energy source, if the shared costs of network charges were paid by fewer users.
In addition, the industry has repeatedly warned that speeding up electrification will leave households that are stranded on the network forced to bear a greater share of their costs.
One distributor, AusNet, is already proposing to charge residential customers an average of $49 a year more until mid-2028 because fewer customers were using gas.
Piper said the group had been pushing the government on renewable gas and welcomed a review into the issue announced this week. The Australian Industry Group was continuing to meet Energy Minister Lily D’Ambrosio.
Three government sources, who were not authorised to speak publicly, said the premier was conscious about public attitudes to gas and had a different view to D’Ambrosio, a vocal critic of gas, particularly in the home.
They said this was a major contributor to the industry’s concerns about mixed messaging, as the premier’s office sought to calm the industry even as D’Ambrosio pushed on with her key policies.
Gas Appliance Manufacturers Association of Australia president Ross Jamieson said the energy minister was saying different things to different audiences.
“She’s a bit like a wind turbine. She blows with the wind,” Jamieson said. “Consequently, we see very, very mixed signals coming out into the market.
“Consumers demand choice in what they do in their own homes. No one likes to be told what they have to do.”
Guerra said the industry had been clear about the need for an ongoing supply of gas at affordable rates, and that Tuesday’s economic growth statement had started to outline support for that.
“We know Victorian business needs gas, we know Victorian households need gas, and ultimately, to get to net zero, we need gas,” he said.
He said an energy road map was needed to explain how that could be achieved, while shoring up the grid to manage demand as more Victorians moved to electricity.
But Guerra was pleased to see the government was beginning to provide certainty after more than a year of advocacy from the industry on preparing for critical shortages.
A Victorian government spokesperson said: “Gas is part of our energy transition – but supply is dwindling and prices are going up. That’s why we are securing new supply and helping households and businesses switch to electric appliances, slashing their energy bills and reducing demand.
“We passed legislation to allow offshore gas storage projects, we approved the only application for new gas production since 2014, and we’re helping Victorians switch to electric to slash their energy bills and preserve the supply we have left for industries that can’t make the switch.”
RedBridge pollster and former Labor Party strategist Kos Samaras said forcing people off gas domestically did not appear “fully researched”.
“The government needs to be careful, not to add this to another set of policies that are challenging people’s anxieties about cost of living,” he said.
Opposition energy spokesman David Davis said the government’s confused stance was getting worse.
“Lily D’Ambrosio is on a vendetta to get Victorians replacing their gas appliances, and yet we see prices surging and supply at risk,” he said.
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