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Out of gas: Consumers warned that fuel has passed its use-by date

Business

The Grattan Institute issued a warning to states like Queensland that a moratorium should be imposed on new household gas connections as the commodity becomes increasingly expensive and is no longer considered a transition fuel to deal with climate change.

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The report, written by Tony Wood and Guy Dundas said gas was in decline in Australia as cheaper and more accessible reserves were depleted.

“The consequences of that reality may be painful for some in the short term, but neither wishful thinking nor denial will serve us well,” the report said.

“The only rational approach, for governments, the energy industry, and its customers, is to begin planning for a future without natural gas, or at least with a substantially reduced role for natural gas.

“It is already clear that households would save money and Australia would reduce emissions if new houses in NSW, Queensland, South Australia, and the ACT were all-electric. In these places, governments should impose a moratorium on new gas connections as a prudent, no-regrets option.

About 29 per cent of homes in Queensland use gas for cooking and about half for hot water and Wood and Dundas said it was no longer a cheaper option or environmentally sustainable. Hydrogen was an option to replace gas, but homes should now be switched to the electricity grid as it becomes less CO2 intensive with the increasing input from solar and wind.

“The Prime Minister has talked up a gas-fired recovery for manufacturing, raising expectations of big price reductions. But the report shows that eastern Australia faces inexorably more expensive gas. If the Government tries to swim against this tide by directly intervening in the market, taxpayers will pay the price via big subsidies,” they said.

“The Government’s best role is to support the development and deployment of the low-emission alternatives that can replace natural gas in manufacturing, such as renewables-based hydrogen and renewables-based electricity.”

Wood and Dundas said gas would continue to play an important backstop role in power generation.

Wood said he was optimistic the Federal Government would not go ahead with proposals to underwrite gas development through funding major infrastructure.

“I’m optimistic because it would fail or be very expensive or both,” Wood said.

Gas industry group APPEA said it disagreed with the report’s finding that the role of gas should be reduced.

Chief executive Andrew McConville said international evidence showed the gas industry injected billions into economies and reduced emissions.

“The industry also disputes the report’s claim that the Australian Government is heading in the wrong direction by targeting increased production and use of gas as part of a gas-fired recovery.  Natural gas has unique advantages that make it the optimal energy source to support economic recovery and growth for Australia,” he said.

“The oil and gas industry can help to drive Australia’s gas fired recovery and a clean energy future – but under the right investment settings.  A true gas fired recovery is not about just manufacturing. It is about every part of our economy, regional jobs, international trade and major infrastructure investment.”

 

 

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