Victoria backs down on sweeping gas bans
The Victorian government has softened changes aimed at electrifying the state and reducing the use of gas following an outcry.
Victoria will allow gas appliances for heating in owner-occupier homes, while businesses can keep gas running in existing commercial buildings as the government pulls back from more sweeping reforms to electrify the state.
The Victorian government introduced a range of measures in 2023 to phase out the use of gas, but has wound back a raft of reforms after an outcry over the move.
After announcing in September that households can continue cooking with gas, the Jacinta Allan-led government on Tuesday will announce that gas heating will remain in place for owner-occupiers in the state.
While gas hot water systems must be replaced with electric versions by March 1, 2027, they can also be repaired if they break down and can also be removed and reinstalled during renovations.
On Tuesday, Ms Allan spruiked her government’s reforms, which she said would protect local gas supply, protect local jobs, and drive down household energy bills.
“We are securing the gas that Victorians need into the future,” Ms Allan said.
Asked whether allowing gas heating appliances for owner-occupiers was a policy backflip, the state’s Energy Minister Lily D’Ambrosio said “no”.
Ms Allan said the decision came as a result of consultation.
“We said we’d go and consult with industry, with various groups, and we’ve done that,” Ms Allan said.
“We’ve listened, and we’ve come back with a package that is about slashing household energy bills, securing gas for industry that needs it and is also supporting renters to have affordable and comfortable homes.”
No changes will be made to rules regarding end-of-life replacement for gas appliances in all existing commercial buildings, while the use of LPG for households or business is also unchanged.
However, Victoria will require all new homes that are built to be all electric, which it claims will benefit new owners by $880 per year or $1820, if they have solar.
All new commercial buildings – other than industrial, manufacturing and agricultural facilities – will also be required to be built all electric.
Victoria has the highest use of residential gas in the country, with about 80 per cent of homes connected to the gas network.
However, the state faces gas shortages by 2029 as existing supplies dry up from the Bass Strait, with LNG imports now being considered to fill the mooted shortage.
Last week, it emerged Woodside Energy and ExxonMobil’s local arm Esso had found new gas in the Bass Strait, offering a rare glimmer of hope for Australia’s beleaguered east coast energy market and buying sufficient time to find a possible policy solution to a shortage that could arrive as soon as next year.
The state said it was taking steps to avoid the gas shortfalls forecast by the Australian Energy Market Operator for south-eastern states by 2029 through its policy of reserving gas for industry by reducing household demand.
“By 2029, these reforms will unlock just under 12 petajoules of gas every year, more than the annual production of Beach Energy’s Enterprise field. By 2035, they’ll deliver 44 PJ annually – enough to meet 85 per cent of Victoria’s forecast industrial demand,” the Victorian government said.
“That means more of Victoria’s gas – the cheapest in the nation – can be used by Victorian manufacturers, supporting jobs and keeping local industry strong.”
Previously, the government was considering a plan to phase out gas cooktops from existing homes, potentially by forcing people to switch out their gas appliances for electric alternatives if they needed replacing.
Victoria announced a plan in May to build renewable energy zones covering 7 per cent of the state’s land area with 5.2 million solar panels, nearly 1000 onshore wind turbines and four transmission projects as it chases a target for clean energy to provide 95 per cent of its electricity by 2035.
The Allan government has previously agreed to allow gas to be stored in empty gas reservoirs in a bid to boost supply security. The projects will support the state’s gas-powered electricity generators, with Labor hoping the Golden Beach project off the coast of Gippsland will help combat forecast gas shortfalls.
In May, the Victorian government approved Viva Energy’s proposed liquefied natural gas import terminal in Geelong, representing a significant policy pivot from the state’s traditionally hardline stance on gas.
However, a Victorian push for the commonwealth to underwrite importing LNG into Australia faces a challenge from states including South Australia over concerns about energy users being slugged with extra costs as the battle to head off a gas supply shortage heats up.
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