Australia's Victoria state looks to wean households off gas

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MELBOURNE, July 2 (Reuters) - Australia's Victoria government released a plan on Saturday aiming to wean the country's biggest gas-consuming state off the fossil fuel, halve carbon emissions by 2030 and drive down household energy bills.

The state, where 80% of homes use gas for heating, cooking and hot water, wants to encourage homes to switch to electric appliances, use solar panels and batteries, and eventually get gas-reliant businesses to use hydrogen and biomethane.

"Gas is no longer the cheap fuel it once was – we know renewables are the cheapest form of energy and we're making it easier for Victorian households and businesses to go all electric with more choice and more support," Victoria's energy minister Lily D'Ambrosio said in a statement.

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The loss of Russian gas supply on global markets has exacerbated price hikes.

The gas-substitution plan includes incentives for switching to electric appliances, the removal of a requirement that all new housing developments be connected to the gas network, and sets higher energy efficiency requirements for new homes.

By freeing up gas from home use, more of the fuel would be available for businesses, such as paper, glass and food manufacturers, that cannot switch from gas use, D'Ambrosio said.

Release of the gas substitution roadmap, in the works for more than a year, was delayed due to an energy crunch last month, when wholesale gas prices quadrupled as demand for gas for power generation amid a string of coal-fired plant outages. read more

The plan comes as southeastern Australia faces potential gas shortages from mid-decade as output falls from the offshore fields, operated by ExxonMobil Corp (XOM.N), that have long supplied the region. read more

ExxonMobil Australia's commercial head David Berman warned in March the gas-substitution plan would deter investment to fill that gap, calling it "the single largest threat to near term gas supply".

Australia's gas industry lobby group said given that coal fuels more than 60% of Victoria's electricity, the plan "means encouraging consumers to switch to electricity is effectively switching to coal".

Green group Environment Victoria said the plan failed to set clear goals and timelines and should have ruled out the use of gas to produce hydrogen.

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Reporting by Sonali Paul; Editing by Lincoln Feast

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