Anti-gas legislation to drive up Victorian energy costs

New legislation to ban all onshore unconventional gas exploration and development in Victoria could lead to higher energy costs and supply risks for energy customers.

Energy Networks Australia chief executive officer John Bradley said access to natural gas was vital to enable Victoria’s transition to a cleaner energy future.

“Blanket bans on gas development are a high risk strategy, given no other state depends more on secure access to this low carbon energy source than Victoria,” Mr Bradley said.

“This year the Australian Government identified a gas supply shortfall for Victoria and southern states over the next 20 years, so blanket bans can only drive up prices or increase the risks of a shortfall that threaten jobs and households.”

Mr Bradley said that the South Australian energy sector highlighted the important role of gas and gas-fired generation supporting power system security and reliability.

“Natural gas can play a vital role supporting supply security as more renewables are added to the system but a state wide ban on gas exploration and production will threaten that transition,” Mr Bradley said.

“Victoria’s energy system already faces a lot of radical change – with Government policies to introduce 5400MW of renewable generation capacity in less than a decade and the recent announcement that Hazelwood power station will close with just five months notice.”

APPEA chief executive Dr Malcolm Roberts said the Victorian Government had chosen to ignore warnings of a looming gas supply shortage in its pursuit of green votes.

The legislation will extend the existing moratorium on onshore gas development until 2020 and permanently ban fracking.

“There is no environmental or scientific reason to ban natural gas development,” Dr Roberts said.

“Countless independent inquiries and decades of practical experience show the industry is safe. It is bewildering that a state that safely produced conventional gas onshore for 20 years until 2006 now claims it is unsafe.”

Dr Roberts said Victoria relied on natural gas more than any other state.

“Victoria desperately needs more gas development – not less. Four out of every five homes use gas; the rate of household usage is more than double the rate in South Australia and almost triple the rate in New South Wales,” Dr Roberts said.

“As a vital ingredient in many manufacturing processes, gas is also critical to the Victorian economy. It reliability and cleaner-burning qualities also make it essential in the transition to a low carbon future.

“The Australian Energy Market Operator and the Australian Consumer and Competition Commission have warned of gas supply shortfalls as early as 2019, yet the Andrews Government continues to ignore this.

“Its pursuit of more renewable energy means it will need more gas in the future to ensure a reliable energy supply.”