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Natural Gas Substitution - Victoria

By Bruce Barbour - August 2021

The State of Victoria has legislated that they will be at zero emissions by 2050. While it could be argued that it should be sooner than this it is far better than what the Morrison Nat/Lib Commonwealth government is proposing - a very weak 2030 target and some nambi-pambi words about 2050. It is interesting that while all of the State Governments have had no issue with committing to zero emissions, including State Liberal Governments, it is apparently too difficult for the useless Federal Nat/Liberal Government (and I put the Nats first in the order as they clearly hold all the levers for the setting of climate policy in the Coalition).

However that is not what this page is about.

Because of the State Government's zero emissions 2050 commitment they realise that they have to move the State away from the use of the fossil fuel natural gas prior to 2050. This is a significant undertaking as Victoria is easily the largest user of natural gas in Australia. Most homes are connected to the natural gas distribution system.

The State Government has recently had two community consultation processes, each calling for submissions from groups and individuals. The subject of both consultations was very similar and really should have been combined into one process. I put in a submission to both consultation - the Covid lock down (No. 6!) provided me with plenty of time to write the submissions.

The first consultation process was from the Department of Environment, Land, Water and Planning:
Help Us Build Victoria’s Gas Substitution Roadmap
Feedback was sought on their Consultation Paper (Archive version Here).
My submission is here.

The second consultation process was from the Infrastructure Victoria:
Towards 2050: Gas infrastructure in a zero emissions economy
Feedback was sought on the Department's Interim Report (Archive Version Here).
My submission is here. If should be read in conjunction with the first submission.

Here is the approach that should be undertaken in Victoria:
  1. Commit to electrification of all domestic and commercial energy supplies;
  2. Immediately ban the installation of all new natural gas appliances in new houses and commercial buildings and for the replacement of non functioning natural gas appliances*. All new appliances, domestic and commercial,  will be electric. Some subsidies for conversion will be available;
  3. All new homes 7 Star, possibly with on roof PV;
  4. Quicken the pace of making the electricity supply in Victoria 100% renewable;
  5. Once the electricity supply gets to a certain percentage renewable (to be determined but probably around 50%, which hopefully will occur well before 2030) begin the process of converting all homes to all electric. The reason for not commencing large scale replacement of existing appliances straight away is that Victoria's grid electricity generation is still still highly coal based and is responsible for a lot of carbon dioxide emissions. Increasing coal generated electricity use may be counter productive for CO2 production. It will also allow for natural attrition of some of the existing gas appliances. If the life of a typical gas appliance is 15 years then if it is 5 years before the start of the change over project a quarter to a third of the gas appliances should already have been changed over. For the large scale replacement program make substantial subsidies available. Work in sections/suburbs across metro Melbourne (outer suburbs to inner) and the rest of the state. This will allow parts of the gas distribution system to be switched off earlier than a random approach;
  6. Hopefully the projects of the full conversion of the electricity grid to renewable and conversion of all homes to all electric can be completed sometime in the 2030's.
The website says that Victoria’s Gas Substitution Roadmap will be released later this year (2021). However it would not surprise me if it was well into the new year (2022) before it is released. There are a lot of very big, very impactful decisions that need to be made. And some of the decisions may have political repercussions.

The Nightmare Scenario  (Added November 2021)

Here is a possible way this could play out.

The Victorian Labor Government adopts a Gas Substitution Roadmap that involves the electrification of all grid connected domestic energy supply - having determined that this is the best means of decarbonisation of this sector of the economy, both in terms of cost and environmental impact. Inevitably there will be a percentage of people that will oppose this change, regardless that the alternatives will cost more and be more environmentally damaging. Some of those opposing will be climate change deniers and want to keep burning fossil gas. Some will want a gas for gas substitution, that is hydrogen. There are also a percentage of people who just don't want change - seemingly any change.

My nightmare scenario is that the Liberals will try to use this dissent for political advantage. Just as Tony Abbott did with the carbon tax the Liberals could say "vote for us and you can keep burning natural gas". They would also mouth some words about carbon offsets and carbon capture and storage (CCS) to try to calm their back bench and voters that are concerned about climate change. Or else they will promise hydrogen even though it will probably be found to be much more costly. Or may promise fossil fuel based hydrogen production - with CCS. In politics sometimes all it takes to be successful is to sway a few percent more to vote for you.

If the Liberals used this tactic and were successful at the election Victoria would be locked into an expensive and an environmentally inferior domestic energy supply. (And Matthew Guy as Premier - Urgh!*) Despite this, it is likely that the drift away from gas would continue due to the economic advantage to the home owner of electrification - possibly meaning that the costly conversion of the domestic supply to hydrogen could in the long term become a stranded asset. However conversion to electrification by this process would be a lot slower than if the conversion process was part of a systematic Government program. It would also "poison the well" so that in the future no party would dare go to an election promising the electrification of domestic energy supply - just as no Federal party will go to an election promising a carbon tax, despite it still being a very good tool for lowering carbon emissions. Once bitten twice shy.

Unfortunately Matthew Guy** (leader of the Liberal opposition) is the type of politician (in the mould of Tony Abbott) that would take the political approach and use this issue (and indeed any issue) for political advantage rather than consider what approach is best for the State, its people and the World. This is my: -

NIGHTMARE SCENARIO*.

(Prove me wrong Matthew - pls.)

* As a consequence of this real political risk I believe that the Labor government will not outright ban natural gas - as suggested in the dot point list above - even though it would be the quickest, cheapest and best way of getting rid of natural gas out of our energy supply system. Instead they will simply encourage the change over through subsidies and grants and the removal of the current regulations that encourage the use of natural gas. Over time the increasing greater cost of the use of natural gas for heating compared to heating using an electric heap pump, heat pump subsidies and advertising and education will mean that very few Victorians will opt for natural gas for in home and commercial heating. It is just a pity that the changeover will be slower than than under an organised government changeover plan. (March 2022)

** Re: - Matthew Guy - remember the rezoning he did in Fishermans Bend which benefited the landowners (how many of these landowners were his or the Liberal Party's mates?) without extracting more benefit for Victorians. Remember that disgusting last minute contract clause the Liberals added to the South Eastern Freeway Tunnel contract just before an election that cost Victorians a billion dollars - how many kindergartens and school upgrades could have been built with that billion dollars? It is part of the job of Government to prevent or minimise the loss of Victorian assets and money, not cost them money simply to make an ill defined political point. In my mind the State Liberals have lost the right to govern again until all members of that government have left parliament. And remember the "Lobster with a Mobster" scandal.

If Matthew Guy's Liberals were elected there would be the risk of more of the same. Victoria can't afford it.

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