"The latest Victorian gas strategy shows the State is embracing a practical, all-of-the-above approach to gas in order to meet energy users' needs," Tim Piper, Victorian Head of national employer association Australian Industry Group, said today.
"The announcement shows the Minister has listened to our views and positively acted to adopt a position which provides a level of confidence for the availability of gas and other energy solutions that industry has not recently enjoyed.
"Potential lack of gas supply and unreasonable gas prices have been two issues of high concern to industry.
"Industry needs process heat and feedstock. Households need hot water, warmth and cooking. All of us need electricity. Gas plays an important role in all of that. But it has become pricey with the growth of LNG exports, and threatens to become even more expensive if the State runs out of gas as the Bass Strait reserves decline.
"Today's announcements on electrification, alongside other recent decisions to re-open the State to gas exploration, support expansion of pipelines and approve an import terminal, help push the risk of a shortfall well back into the future and will provide some reassurance to industrial energy users.
"There is an important role for demand-side transition to the gas alternatives that make sense for different sorts of gas users. Industry has had numerous concerns about unintended consequences and a potentially unmanageable pace of change.
"However, Minister D'Ambrosio has listened, through numerous and productive conversations with Australian Industry Group. As a result, the gas and electrification strategy she and the Government have finalised represents a significantly more practical and implementable approach. Industry will have much more runway to prepare for change, and the changes being made strike a better balance on regulation versus incentive.
"We advocated for funding to enable food processor energy upgrades and for diversification by appliance suppliers.
"The Minister recognised these needs and offered more support noting that technologies to affordably cut industrial gas needs are starting to hit the market, and help for early adopters will be timely and effective. We believe more support will be needed over time to scale industry uptake, whether through an expanded fund or reforms to the Victorian Energy Upgrades program.
"The supply freed up by Victorian demand side transition over the next decade could be similar in scale to the supply from New South Wales' mooted Narrabri project. That is not enough to solve gas reliability problems alone. But as part of a stack of supply- and demand-side initiatives it will be very helpful.
"While industrial gas users badly need to avoid a gas shortfall, they have been worried that a decline in residential gas use will leave industry stuck with more of the costs of a gas network built largely for others. That is a very solvable problem, but it can only be fixed if it is recognised and discussed.
"The strategy provides important reassurance on this point. The transition will be more gradual than some have feared. The Minister and the Government have expressly and deliberately stated they understand the problem and are willing to work with industry and others to keep the rules on network cost recovery fit for purpose as and when that becomes necessary.
"Even in their moderated form, the State Government's gas changes are ambitious.
"There is much implementation work over the next couple of years. And more decisions are needed, including on a renewable gas target to provide further long-term supply for those industries that will need a gas input even after net zero emissions has been achieved.
"The State can overcome its energy challenges and better meet industry needs with the right combination of pragmatism and ambition. On balance, today represents a good step in that direction," Mr Piper said.
