Victorian government urged to ditch gas hot water ban

The Victorian government must ditch a ban on gas hot water systems as part of a broader retreat on electrification in the state, the gas industry body has demanded.

Victorian Minister for Energy and Resources Lily D'Ambrosio, Premier Jacinta Allan and Preston MP Nathan Lambert announce the government’s gas policy. Picture: Andrew Henshaw

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The Victorian government must ditch a ban on gas hot water systems as part of a broader retreat on electrification in the state, the gas industry body has demanded.

The Allan administration backtracked on a key plank of its net-zero policy by allowing gas appliances for heating in owner-occupier homes after previously pledging to force an all-electric option on households.

But from March 1, 2027, gas hot water systems that reach end of life must be replaced with electric versions in a move that has attracted further pushback from industry.

“The ban on gas hot water systems, even with sweeping exemptions, risks creating unnecessary red tape, administrative delays and added pressure on households and regulators alike,” the Australian Pipelines and Gas Association said.

“Technology-neutral policy makes sense. Not just for emissions outcomes, but for household budgets.”

Victoria’s backdown showed “navigating the road to net zero is proving to be harder and more expensive than initially thought,” Energy Users Association of Australia boss Andrew Richards said.

Ai Group’s Tim Piper.

The Australian Industry Group said the state’s energy transition would be more gradual than some have feared.

“We believe more support will be needed over time to scale industry uptake, whether through an expanded fund or reforms to the Victorian Energy Upgrades program,” said Ai Group’s Victorian head, Tim Piper.

Tuesday’s backdown on the push for owner-occupiers to switch to electric heaters followed a scale-back by the government in September when it confirmed households would be able to keep cooking with gas.

Other gas-related measures announced by the government on Tuesday included that all new homes and new commercial buildings – except for industrial, manufacturing and agricultural buildings – be built all-electric from 2027.

New minimum energy efficiency standards for rental properties – including the requirement to replace gas heaters at end of life with reverse-cycle air­conditioners – will come into effect from March 1, 2027.

There were no changes to rules regarding end-of-life replacement for gas appliances in existing commercial buildings, and the use of LPG for households or business was also unchanged.

VCCI chief Paul Guerra says Victorians are having their choice limited without gas hot water services. Picture: Brenton Edwards

Victorian Chamber of Commerce and Industry chief executive Paul Guerra said the government’s “heavy-handed approach” would cost Victorians more at a time when the cost of living and cost of doing business pressures were high.

“The announcement by the state government is not in line with the original proposal, and the lack of consultation with industry has delivered an outcome that is confusing and limiting for Victorians,” Mr Guerra said.

“While we are happy that cooktops are exempt, the issues around banning gas heaters and gas hot water systems are ultimately limiting choice for Victorians.

“Furthermore, banning gas connections for both new homes and new commercial businesses from 2027 further disincentivises business in the state.”

Australian Hotels Association Victoria CEO Paddy O’Sullivan welcomed the move to support hospitality venues to continue using natural gas.

“Pubs and hotels rely on gas for commercial cooking to deliver quality, efficiency and consistency in the kitchen,” he said.

“Until proven electric alternatives exist, gas must remain part of the hospitality toolkit for commercial cooking.”

Victorian opposition energy spokesman David Davis said the government’s gas plans constituted a “harsh and draconian agenda”.

“Their so-called “transition” is more expensive, more unstable, and unreliable, undermining ­public and commercial confidence and threatening Victoria’s energy and commercial security,” Mr Davis said.

“Victorians deserve real choice, real affordability, and real energy security – not an ideological ­crusade dressed up as climate ­policy.”

Victorian Premier Jacinta Allan said her government had consulted with industry and that its plan 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.