If the gas industry gets its way, the ‘little blue flame’ could become Victoria’s big pollution problem, accounting for almost half of Victoria’s emissions.
Last year the Andrews government announced a world-leading climate target to cut emissions by 75 to 80% by 2035, including a promise to close all remaining coal power stations and reach 95% renewable energy.
Having an end date for coal power is a massive step forward for climate action, especially in Victoria where we have some of the most polluting coal power stations in the world – but what about fossil gas?
Right now burning gas is responsible for about 17% of Victoria’s climate pollution. But our analysis shows that as we phase out coal power, gas could become responsible for a whopping 45% of the state’s emissions by 2035.
How? Because under our new climate targets, the total amount of pollution released in Victoria will shrink, but gas industry forecasts assume we’ll still be burning the same amount of gas. That will make pollution from gas a much larger share of the pie.
So large, in fact, that gas could become our biggest single source of emissions by 2035. Without a plan to reduce gas demand, it could put our new climate targets out of reach!
This is much bigger problem in Victoria because we use far more gas than other Australian states or territories.
What’s worse is that this is based on forecasts put forward by the gas industry. They want to keep profiting at our and the climate’s expense, and so they’re assuming Victoria will keep burning gas at the current unsustainable rate until at least 2040.
The Victorian government does have a Roadmap to transition the state off gas. But at the moment it lacks the strong targets, timelines and incentives that we need to help millions of homes and small businesses shift away from gas.
Two-thirds of gas is burned in homes and small businesses, mainly for heating and hot water. Cooking only uses a tiny amount, about 4% of household use. And all those millions of gas heaters and hot water systems add up to an enormous amount of carbon pollution.
In fact, if nothing changes, then gas burned in homes and small businesses could be responsible for up to 37%of pollution in 2035.
But the good news is that efficient electric heating and hot water systems are readily available and cheaper to run. So while some industries that use a lot of gas still need technological breakthroughs to electrify, we can get started on reducing emissions from household gas use right away.
This should be one of the highest priorities for cutting pollution in Victoria. But the big barrier for households and small businesses is the upfront cost of a new efficient electric appliance. Which is why urgent government action is needed to strengthen the policies and incentives for electrification.
The Victorian government’s Home Heating and Cooling Upgrade Program was a good example, providing rebates of $1000 to make the switch, but it’s no longer accepting applications. We urgently need a new government program to support all households, especially renters and people on low incomes, reap the benefits of cleaner, affordable home heating, plus efficient electric water heaters.
If we don’t seriously reduce the consumption of gas in the next 12 years, then other sectors (like agriculture and heavy industry) will have to compensate and do more to cut emissions. These other sectors don’t have the same clear pathway to reduce emissions, which will make action on climate change slower and more expensive.
First, we looked at the level of carbon dioxide pollution in 2035 that would be consistent with meeting Victoria’s new climate targets. The figure is between 23.72 and 29.65 million tonnes.
Then we looked at the predictions the gas industry is relying on to justify investment in gas import terminals and the gas distribution network. They assume that very little changes, with gas demand in Victoria remaining at its current high levels all the way until 2040.
Next we converted this amount of gas into millions of tonnes of pollution when it’s burned. The result was 10.72 million tonnes, which means burning gas would be responsible for about 45% of Victoria’s total emissions if we reach the upper range of our new 2035 climate target. If Victoria instead reaches the lower range of the target, then burning gas would be responsible for 36% of emissions.
We calculated this using three scenarios.
The first scenario assumed Victoria would continue to burn gas at current rates. According to the latest Victorian government report on greenhouse gas emissions, gas use in homes and small businesses was responsible for 10.5% of Victoria’s climate pollution in 2020. That’s about 8.7 million tonnes of carbon dioxide pollution.
We then projected that into the future, comparing it against the total amount of emissions allowed in 2035 to meet Victoria’s climate targets. The result was that pollution from gas burned in homes and small businesses could be responsible for between 29% and 37% of emissions in 2035.
The second scenario assumed a slight decline in gas use. This was based on the Australian Energy Market Operator’s ‘Progressive Change’ trajectory, which most closely aligns with forecasts from Victorian gas distribution companies. This time the result was that pollution from gas burned in homes and small businesses could be responsible for between 22% and 28% of Victoria’s emissions in 2035.
This shows a faster transition will result in gas having a smaller share of emissions in 2035, reducing the burden on other sectors of the economy to cut pollution, and helping Victoria meet its new climate targets.
Gas is mostly composed of methane, which has a global warming impact 75 times higher than carbon dioxide over a time period relevant to meeting international climate targets.
What’s more, methane emissions are rising fast. While carbon dioxide emissions are roughly 50% higher than in the pre-industrial era, methane is 150% higher.
At least 25% of today’s global warming is driven by methane from human activity. If methane leakage from gas exploration, extraction and distribution keeps increasing this percentage is expected to grow.
For a long time, the gas industry marketed gas as a ‘cleaner’ energy source than other fossil fuels, especially in Victoria where most of the electricity is generated by burning brown coal. This claim was based on the fact that gas produces significantly less carbon dioxide than coal during combustion for the power produced.
However, the rapid transition in Australia’s energy system coupled with technological breakthroughs has changed the facts underpinning this argument. Already 34% of Victoria’s electricity is generated by renewables and the government is aiming for 95% renewable energy by 2035. This means the electricity grid is becoming much cleaner. Electric appliances such as heat pumps are also much more efficient than gas heaters. The result is that heating homes and hot water with these super-efficient electric appliances powered by renewable energy can reduce emissions compared to using gas, even in Victoria.
If gas use continues at the current high levels, then it would be a serious threat to Victoria’s new 2035 climate targets. Gas would be responsible for up to 50% of the state’s emissions, which means the remaining sectors of the economy would have to cut pollution very sharply. We’d need to do further analysis, but we can say if these gas plans come to pass, it would be almost impossible for the government to cut emissions by 80% by 2035, which is the upper range of their target.
The Andrews government has pledged to reach 95% renewable energy by 2035, which means the end of all coal-fired power in Victoria. This means the electricity grid will be much cleaner. Government modelling found emissions from electricity would drop from 41.7 million tonnes in 2020 to 5.9 million tonnes in 2035.
While switching from coal to renewables is a huge achievement, it’s not enough to meet Victoria’s climate targets. It would still leave an annual ‘emissions gap’ of between 18 and 24 million tonnes of pollution in 2035. Other sectors would need to cut emissions to fill this gap, so a plan to rapidly transition from gas to efficient electric appliances in Victorian buildings should be a priority action for government.
Reaching net zero emissions will require all sectors of the economy to play a role. The transport sector has the same opportunities to cut emissions as the gas sector – switching from fossil fuels to electricity using renewable sources.
Most transport industry forecasts assume large-scale adoption of electric vehicles over the next decade. It is unheard of for industry forecasts to assume oil demand will remain flat over the next two decades, especially in Australia. Yet this is what industry forecasts are showing for gas, which is why we have exposed them in this report.
Other sectors such as agriculture do have many emissions reduction opportunities, but may need more time to deploy effective and affordable options to reduce their climate footprint.
Finally, the gas sector presents unique opportunities and challenges. On the one hand, the solution for most gas use is simple and readily available: help households switch to efficient electric appliances powered by renewable energy. On the other hand, there are serious barriers for people to switch, particularly the upfront costs for low-income households and renters. These are structural problems requiring considered government intervention.
Without the proper regulations and incentives, Victoria is unlikely to meaningfully reduce gas consumption levels. Transitioning away from gas will take a coordinated approach over the next decade – which is why it is urgent to address this sector.
Victoria’s new 2035 climate targets were announced after the Environment Effects Statement hearings had finished so they won’t be included in the report sent to the Minister. However, the Minister has ultimate discretion on whether or not to give this project the green light. We’re calling on the Planning Minister Sonya Kilkenny to take these new 2035 climate targets into account. The government should not be approving a gas terminal that will import enormous amounts of gas for decades, jeopardising the election pledge to cut emissions by 80% by 2035.
Victoria’s new climates are expressed as a range: reducing emissions between 75 and 80% by 2035. The report shows gas emissions as a share of total emissions for both the lower and upper ends of this range. However, we believe the upper 80% emissions goal should be emphasised because it’s more closely aligned with calls from climate scientists for Australia to reach net zero emissions by 2035.
Biomethane offers an important opportunity to reduce the carbon footprint of landfills, wastewater treatment centres and the dairy industry. Nevertheless, these sources are limited, reducing the potential of biomethane to supply a large volume of gas to Victoria. Biomethane is also several times more expensive than existing fossil gas, which in turn is more expensive than electricity, making it unaffordable as a total replacement.
The gas industry has been quick to promote another alternative, ‘green hydrogen’, also sometimes called renewable gas. Despite hydrogen holding some potential for high heat applications for industry, the reality is that hydrogen will be (following most estimates) far more expensive than electricity. Adopting hydrogen would require replacing around 90% of the gas network as the current pipelines would suffer embrittlement if hydrogen is transported at a concentration higher than 10%. Most gas appliances would also need to be replaced.
Getting off gas means cleaner air, inside our homes and out, and lower bills. Join the call to help every household – whether we rent or own – start the switch.