An under siege Australian gas industry has described a report calling for millions of householders to switch to electricity as full of errors and misrepresentations.
The Australian Pipelines and Gas Association (APGA) says the Grattan Institute’s ‘Getting Off Gas’ report is littered with basic errors, “erroneous” assumptions and empirically incorrect conclusions that could have been avoided by conducting more consultation with industry.
APGA chief executive Steve Davies highlighted a statement contained in the report pertaining to the German’s gas industry as a prime example of the lack of rigour undertaken by the report’s authors.
Mr Davies said a statement that Germany will ban gas boilers from 2024 is an example of a simple error in the report that could have been prevented.
APGA pointed out that the German ruling coalition had reversed the decision within months because it recognised a full-electrification pathway as being far more complex than first thought.
Instead, the revised German scheme would provide homeowners with the choice to convert to a heat pump, run on district heating, or install a gas heater that can be converted to run on hydrogen into the future.
APGA believes that type of strategy will be more palatable to the Australian public.
Thoughtful analysis needed
In its report, the Grattan Institute – a largely publicly funded “think tank” – declared Australia will not hit its net zero emissions target by 2050 unless it “gets off gas”.
APGA agrees in some ways. However, it says that while it is critical for Australia to reach net zero as rapidly as possible, there must be thoughtful analysis, which is led by evidence rather than rhetoric.
Mr Davies says gas networks support the phase out of natural gas and are already transitioning to carbon-neutral gases with minimal cost, at a time when power prices are surging.
Long way behind
APGA agrees that Australia is well behind the rest of the world in de-gasification – however, it believes this may provide advantages.
“This gives us the opportunity to learn from mistakes of countries, such as the UK and Germany, that ventured down an electrification only pathway but had to rethink their approach because of the economic and engineering challenges.”
The Grattan Institute says the switch to electricity will require homes to switch to more efficient electric appliances and for governments to play a key role.
Major gas appliance switch
The report written by the institute’s energy and climate change program directors Tony Wood and Alison Reeve, and associate Esther Suckling, stated that natural gas accounts for 22 per cent of Australia’s greenhouse emissions.
“Getting off gas will save money for most Australian households and is necessary to meet our emissions-reduction targets. It requires governments and regulators to tackle some difficult policy and financial challenges. So far, so bad,” the authors suggested.
Australia’s 5 million households have been named as the biggest gas users through daily activities such as cooking, heating water and their homes.
APGA hit back at suggestions that electrification will provide cost benefits to consumers.
“The idea that electricity will be cheaper for consumers any time soon is detached from reality,” Mr Davies said.
“Just this week, energy retailers announced electricity prices for households and businesses would rise by as much as 50%. This does not yet account for the tens of billions of dollars in additional electricity transmission and network upgrade costs that will be added to consumers’ bills in the decades to come.”
Switch to renewable gas an answer
The Grattan Institute report also noted that this a policy-free area, and the sheer numbers mean it will take years for these consumers to move.
It has suggested for example, that Victorians should consider three possible alternatives to natural gas: biomethane, hydrogen or electricity.
Both the Grattan Institute and APGA have identified the switch to renewable gas as a strategy that will help reduce emissions.
The gas industry lobby group said its members are already progressing a number of renewable gas projects through their networks.
It pointed to the HyP SA facility which is supplying a 5 per cent renewable gas blend to customers in South Australia, including households, businesses, and schools with plans to transition the entire SA gas network to zero emissions green hydrogen before 2050.
Elsewhere, Jemena’s Malabar facility in NSW is utilising biowaste from Sydney’s wastewater to produce renewable gas to supply an estimated 6,000 households from mid-2023 with the potential to expand to more than 15,000 connections.
Governments need to lead the way
The Grattan Institute has proposed that governments play a key role in ensuring a successful electrification take up by adopting three strategies.
First, they should set clear end-dates for gas use and should ban new gas connections.
It also suggested that governments should pay to upgrade social, community, and Indigenous housing. To stimulate the transition and drive down appliance costs, they should provide low-cost finance for homeowners, and tax incentives for landlords, for a limited period.
It also proposed that householders should make the move to electricity at more financially suitable times such as when they may be replacing broken gas appliances, undertaking renovations, or building a new home.
Who should pay?
The big question is who should pay – and no-one really has a good answer,
The gas industry – and governments and households – have invested billions in gas infrastructure and appliances since the first night of reticulated gas supply in Australia was introduced on the May 24, 1841.
The Grattan Institute report says it is “lamentable” that governments, regulators and the businesses failed to act on the potential threat of strong climate-change action at least two decades ago.
It said it now falls to governments to work with the businesses to determine how and when the switch over costs are paid and who will be responsible.
For a homeowner that has invested thousands in a new gas stove, or gas-fired hot water system, this is probably the biggest issue to be sorted out.
