Victoria is Australia’s largest consumer of residential gas, with more than 2 million households and businesses using the fossil fuel for heating, cooking or hot water. The prospect of an impending shortage has also been intensifying concerns among manufacturers that depend on gas for energy or as a raw material. In 2019, Dow Chemical cited rising gas prices as one of the reasons for closing its plant in Altona in Melbourne’s west. Last year, fertiliser manufacturer Incitec Pivot openly blamed gas prices when it announced it would shut down its 50-year-old Gibson Island plant in Brisbane.
Conservation groups, however, say authorities’ predicted gas shortfalls are far enough away for the government to focus on reducing gas demand – such as by encouraging a switch from gas to electric appliances or banning new residential gas connections – without needing to boost supply to avoid price shocks.
Environment Victoria campaigns manager Greg Foyster said ExxonMobil appeared to be launching a “pre-emptive attack” on a Victorian government policy that had not yet been released.
“What’s really going on here is that the gas industry is scared of losing customers because people are realising it’s now cheaper to heat their homes with electricity than gas,” he said. “So they’re trying to spook the government with a scare campaign before that policy is released.”
Victorian Energy Minister Lily D’Ambrosio said consultations were under way on “gradual transition pathways” to substitute gas and achieve Victoria’s emissions-reduction targets, while also ensuring gas was still available to those who need it most.
“Gas is no longer the cheap fuel it once was – to help address this we’re assisting Victorians to shift to cheaper clean energy alternatives as we transition to net zero emissions by 2050,” she said.
“We are not considering penalties or requirements for those who want to continue using gas.”
ExxonMobil and BHP’s jointly owned Bass Strait oil and gas fields have traditionally supplied up to half of Australia’s east-coast gas demand, but have recently been in rapid decline.
Last week, ExxonMobil announced it had given the financial go-ahead to expand gas development from the Kipper field and was approaching another decision to boost production from the Turrum field, two projects the company said would amount to a $400 million investment.
However, Mr Berman says that “supportive government policy” would be crucial to determining whether the Turrum investment proceeded. “We will carefully evaluate whether to proceed with or discontinue those additional investments considering any policy decisions related to the Victorian Gas Substitution Roadmap,” he says.
A landmark report by the International Energy Agency (IEA) last year warned investors must avoid funding any new oil and gas fields for the world to achieve the Paris Agreement’s goal of limiting global temperature rises to 1.5 degrees. United Nations secretary-general Antonio Guterres said scientific warnings about the dramatic effect of human-induced climate change “must sound a death knell” for all fossil fuels “before they destroy our planet”.
Mr Foyster said the Victorian government was taking the right approach by working on gas substitution plans, and using efficient electric appliances for heating instead of gas would “save households money and reduce emissions”.
“The only loser is the gas industry so they’re making speeches like this to defend their interests,” he said.
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