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In its first-ever yearly evaluation of how Australia is doing in cutting emissions, the Climate Change Authority cautioned us: "We have some tough choices and compromises ahead, both as a society and as individuals, to smoothly shift to a net-zero economy."
In many instances, it'll be up to politicians to navigate these compromises on our behalf, and various individuals and industries are expected to feel the impact.
People relying on stable, well-paying jobs in coal power stations and mines, for instance, will need to explore new employment opportunities. The steel industry must undergo a complete makeover, shifting towards recycled scrap or hydrogen instead of coal.
In agriculture, addressing methane emissions from cattle and sheep becomes a priority. With the transition to electric vehicles, motor mechanics may experience a decline in demand, potentially leading to business closures.
Residents in rural areas might see significant and lasting changes to their scenic landscapes due to the installation of power lines or wind turbines. Additionally, the Climate Change Authority emphasized the need for governments to phase out household gas appliances.
Chris Bowen wasted no time in responding. On the ABC's 7.30 program, the climate change minister essentially shifted responsibility, stating, "Don't look at me – that's the responsibility of state governments."
However, this claim is not accurate. A nationwide agreement is essential for phasing out gas appliances, as implementing such a change without a unified law could violate our constitution's prohibition on trade restraints between states. Although the Victorian government is making efforts through its gas substitution roadmap, achieving this goal without Bowen's support poses a considerable challenge.
Now, consider an alternative scenario: imagine Bowen endorsing the authority's suggestion. Picture him, alongside the prime minister and state premiers, announcing a plan to halt the sale of residential gas appliances within two years. In this scenario, households would need to replace gas heaters, cooktops, and water heaters with efficient electric alternatives once their existing appliances wear out.
Undoubtedly, there would be a commotion. Chris Bowen would likely be labeled as radical and reckless, with media outlets running headlines predicting households freezing over winter. Critics might dub the move an extreme sovereign risk for investors, and there could be claims that it's unAustralian, even though most barbecues would remain unaffected.
But, is this truly a radical decision?
The reality is that millions of Australian homes already function well without relying on gas. This includes homes in regions exposed to very low overnight temperatures in winter, such as Tasmania and inland rural areas. The effectiveness of reverse-cycle air conditioners as heaters is proven – millions of homes in chilly Scandinavia depend on this heat-pump technology to keep their living spaces warm.
Absolutely, I agree. Traditional electric resistance cooktops leave much to be desired. However, newer induction cooktops offer a level of precision and rapid adjustment that many top chefs around the world actually prefer over gas.
Moreover, this decision stands to benefit consumers financially. The Institute for Energy Economics and Financial Analysis, a think tank, conducted an economic analysis of the gradual phasing out of gas appliances in Victoria as they reached the end of their lifespan. Given the significant residential gas usage in the state, the analysis revealed that the phase-out could result in a net saving of $900 per household. This calculation considered the increased electricity usage and financing costs for the replacement of gas appliances with electric ones. While gas pipeline owners may incur a loss of $3.5 billion, the broader community is projected to gain economic benefits totaling $17 billion from 2023 to 2050.
Additionally, a compelling reason to phase out residential gas is the necessity to reserve gas for industries that face challenges in transitioning away from this fuel. The truth is, Victoria's offshore gas fields, historically the primary source for Victoria, South Australia, and New South Wales, are depleting.
According to forecasts from the Australian Energy Market Operator, by 2027, Victoria, South Australia, and NSW could encounter worsening gas shortages each winter, with the situation deteriorating in subsequent years. If governments don't take action to shift from gas to electric alternatives, the overall annual gas shortfall is anticipated to reach approximately 20 petajoules by 2030 under AEMO's central step change scenario.
To put this in perspective, a 20 petajoule gas shortfall is akin to approximately 13 winter days without any gas at all. While in reality, it wouldn't mean a complete absence of gas for entire days, it would involve rationing it over more days throughout the winter.
If our energy and climate change minister deems the decision to phase out residential gas appliances too challenging, then achieving the net-zero goal might seem insurmountable. In the grand scheme of decisions and trade-offs required for reaching net zero, this is considered one of the more manageable steps.
Tristan Edis, a director at Green Energy Markets, provides analysis and advice on energy and carbon abatement policy and markets.
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