Modelling shows Andrews gas plan not powering re-election campaign

Daniel Andrews’ signature gas policy will see Victorian households out of pocket for more than a decade, and only result in a household greenhouse gas emission reduction of about 3 per cent.

Victorian Premier Daniel Andrews and his wife Catherine arrive at Goodstart Early Learning during the 2022 Victorian state election campaign in Narre Warren on Sunday. Victorians go to the polls on Saturday. Picture: AAP Image/Diego Fedele

Daniel Andrews’ signature gas policy will see Victorian households out of pocket for more than a decade, and only result in a household greenhouse gas emission reduction of about 3 per cent.

These are the findings of new modelling by Frontier Economics of the implications of the Andrews government’s Gas Substitution Roadmap, announced earlier this year, which aims to encourage the two million Victorian households that currently rely on gas to “upgrade to efficient electric appliances, lower energy bills and improve efficiency of homes”.

The modelling comes six days out from polling day, amid a torrid election campaign that has seen both leaders plagued with questions over integrity.

Liberal leader Matthew Guy on Sunday campaigned in the affluent Melbourne seats of Kew, Brighton, Caulfield and Bentleigh, but struggled to get out a message about plans to streamline government services amid controversy surrounding two of his candidates.

Victorian Premier Daniel Andrews at Goodstart Early Learning with,(from left) Rafael Flores, 2, Natalie Flores, Selina Flores, 4, and Minister for Early Childhood and Pre-Prep, Ingrid Stitt. Picture: NCA NewsWire/Josie Hayden

As of Saturday, 817,888 Victorians had voted via pre-poll, representing 18.6 per cent of enrolment, compared with 542,749, or 13.1 per cent of enrolment, at the same point in 2018.

The modelling of the Andrews government’s plan to encourage Victorian households to replace gas with electricity is being released on Monday, having been commissioned by Gas Energy Australia and the Australian Gas Industry Trust.

Unlike modelling in the Andrews government’s Gas Substitution Roadmap, and by the Climate Council, which the government cites in claiming that switching to electrical appliances will save Victorians money, the Frontier Economics modelling takes into account the cost involved in replacing appliances, rather than only examining the savings once that considerable investment has been made.

Frontier Economics looked at two case studies, examining costs and emissions involved in replacing LPG appliances with high-efficiency electric appliances, and cheaper, lower-efficiency electric appliances. It used the LPG example to reflect Gas Energy Australia’s predominantly regional client base, and contends customers in Melbourne have even more to gain from sticking with natural gas, because it is slightly cheaper and lower-emitting than LPG.

The high-efficiency electrical appliances example found the household would incur $11,871 in upfront costs, save $718.33 on annual bills and reduce emissions by 467kg per year – equating to 3.1 per cent of the 15 tonnes of greenhouse gases the average house emits each year.

“This means if homeowners fork out for all high-efficiency electrical appliances in their home, it would take more than 12 years to get a return on investment for a relatively small reduction in their CO2 output,” Gas Energy Australia chief executive Brett Heffernan said.

“Given switching to these electrical appliances only reduces emissions by 9kg a week, the price of carbon abatement is a whopping $282.65 per tonne, which is 16 times higher than the average price per tonne of buying Australian carbon credit units at $17.35.”

The cheaper, less-efficient electric appliances example found the household would incur $6520 in upfront costs, save $212.19 on annual bills, while increasing emissions by 960kg per year.

Key to both major parties’ pre-election policy platforms have been initiatives to provide one-off payments to assist with spiralling energy costs, as well as longer-term plans around energy supply.

The Andrews government claims its plan to revive state-owned power will bring down prices – a claim contradicted by its own modelling, which predicts a 40 per cent increase in power prices between 2025 and 2035.

The opposition’s policy of “turbocharging” Victorian onshore gas production and reserving 100 per cent of any new gas for local households and businesses has also been criticised by industry experts, with the Grattan Institute’s Tony Wood last week saying he finds it “hard to see” that the policy “would actually do anything good, and I can think of reasons why it’s bordering on silly.”

Energy Minister Lily D’Ambrosio said only Labor was “driving down Victorians’ power bills by supporting millions of households and businesses to install solar panels, switch to electric and energy efficienct appliances and get a better deal.”

“Replacing old fossil gas appliances with new electric ones will save you money, and the only people who disagree with that are the people who sell fossil gas and their mates in the Liberal Party,” Ms D’Ambrosio said.

Opposition Energy spokesman David Southwick said the Frontier Economics modelling “further highlights the need for a common sense, not ideological, approach to energy.”

“Whilst Daniel Andrews has a plan to shut gas off and increase power prices, the Liberals and Nationals have real solutions to unlock more supplies and keep one hundred per cent of new gas for Victorians businesses and households,” Mr Southwick said.