Industry lobby groups have hit out proposed extensions to gas bans in Victoria, saying that the moves will saddle gas dependent businesses with higher costs, stifle investment in gas and energy intensive enterprises and compromise energy security.

As the Victorian Government has released a Building Electrification Regulatory Impact Statement which explores options to expand an existing gas ban to more buildings across the state, a coalition of industry bodies representing more than 10,000 businesses across industry, manufacturing, gas supply and plumbing has called on the government to reconsider its proposed gas ban.

In a joint statement, the groups say that the ban have detrimental impacts.

“The Building Electrification Regulatory Impact Statement will increase costs for large and small businesses, stifle crucial gas investment and leave Victorians facing higher energy bills and reduced energy security,” the statement reads.

“The proposed gas ban would saddle Victoria’s 70,000 gas-reliant businesses with significantly higher operating costs into the future, as they absorb the network costs previously shared across all gas users. This policy would also deter new energy-intensive businesses, undermining opportunities to stimulate economic growth.

“This proposal will materially impact business competitiveness and viability within Victoria.

“Restricting access to gas, including renewable gases, will constrain new investment in gas infrastructure and production, which the Government itself has called for in this week’s Economic Growth Statement and has stated is essential for Victorian industry.”

The release of the RIS comes as Victoria aims to achieve carbon emissions reductions of 45 to 50 percent below 2005 levels by 2030 and 75 to 80 percent below 2005 levels by 2035 before reaching net zero by 2045.

As things stand, Victoria has the higher use of fossil gas for heating, hot water and cooking in Australia.

All up, more than two million Victorian homes and businesses are connected to the gas network. This includes around 76 percent of homes, more than 600,000 commercial buildings and more than 800 large industrial gas users.

Victoria is the only state in Australia where gas use is higher than electricity use in the residential sector.

Gas also accounts for around 16 percent of the state’s total emissions.

In response, the Victorian Government is moving to reduce or phase out the use of gas across the state under its Gas Substitution Roadmap.

From 1 January this year, gas connections were banned on all new residential dwellings along with residential subdivisions that required a planning permit.

The latest RIS considers four options to build on this and to expand its gas bans in residential and most commercial premises.

Of the four options considered, the paper considers the third to be the recommended option.

Under this option:

• The current (aforementioned) ban on gas in newly constructed buildings would be extended to cover all residential buildings and most newly constructed commercial buildings. This includes offices, retail buildings, warehouses, public buildings and several other types of building (building classes 3, 4, 5, 6, 7b, 9, and 10a and 10c as classified under the National Construction Code). It excludes industrial, manufacturing and agricultural buildings which are more difficult to electrify.
• In existing homes and residential buildings, a new requirement will be introduced to require all gas hot water and heating systems to be replaced with electric systems at their end of life. Existing gas cooktops in residential premises will not be affected and existing commercial premises will not be affected.

In its report, the government argued that recommended measures would help to meet carbon reduction objectives, alleviate gas shortfalls in east coast markets and would assist households and businesses to avoid being caught in rising gas prices.

It suggests that this option will deliver net benefits on a present value basis of $5.0 billion over ten years and $7.42 billion over twenty years.

This will deliver a benefit to cost ratio of 1.85 over ten years or 1.91 over twenty years.

The strategy also has some support from green building lobby groups.

Davina Rooney, CEO of the Green Building Council of Australia, welcomed the latest proposed expansion of the moves to phase out gas use.

“GBCA supports the Victorian Government’s ambition to phase out gas as a critical step toward a low-carbon, energy-efficient future. Moving away from gas will reduce emissions, improve indoor air quality, and deliver broad benefits for people and the environment.

“Clear government policies and support, including incentives, will help ease the transition for businesses and communities, driving innovation, investment in the supply chain and economic growth and opportunities. We acknowledge the concerns from businesses, but electrification and renewables will provide long-term cost savings and energy security.

“The Victorian Government’s preferred approach allows existing commercial buildings to replace gas appliances at end-of-life. While some buildings may face challenges in transitioning, strong incentives and support to encourage electric alternatives will be essential. Electrification will future-proof commercial buildings, align with climate goals, and deliver substantial savings for businesses over time.

“We look forward to consulting with the Government on the details of the proposed options to ensure Victorian homes and businesses are supported in the transition to a net zero emissions future.”

In the aforementioned statement, however, aforementioned industry groups call for a different approach to Australia’s energy transition.

“Industry supports a pragmatic energy transition and believes net zero can be reached without jeopardising the future of Victorian industry,” the statement read.

“A truly effective and equitable energy transition must recognise this diversity of needs and allow all Victorians to decarbonise in the way that best suits their individual circumstances, ensuring no one is left behind.

“We urge the Victorian Government to engage in meaningful consultation with industry to fully understand the economic consequences of this policy proposal. The future of the State’s economy is at stake.”

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