Households will need government help to turn off gas

Australia needs a deadline for ditching gas appliances like cooktops and hot water heaters, but more than a million families will likely need help making the switch to electric, a new report has found.

Research published on Monday by the Grattan Institute found Australia must urgently reverse an expansion in home gas use and even eventually ban fossil fuel outright to achieve net zero.

And governments will need to help foot the bill for replacing millions of gas stoves, heaters and hot water systems – particularly for renters and low-income households who cannot afford it.

Grattan Institute energy program director Tony Wood said state and federal governments must act now or risk families needing to prematurely replace their appliances to reduce emissions.

“If we stop new connections and start encouraging people to change over when their existing gas appliances fall apart, then we can start making some real progress,” Mr Wood said.

“We’ve got to start now, otherwise we’re never going to get there.”

The good news is that households who can make the switch will save, with the report finding that families could reap between $1970 (Sydney) and $11,418 (Canberra) over 10 years by upgrading to electric appliances.

‘Wrong direction’

Australia has an estimated 4.5 million gas water heaters, five million gas stoves and 2.7 million home heating systems – they all must be replaced to achieve net zero.

But, worryingly, rates of gas use in Australian homes are heading in the “wrong direction”, the Grattan Institute found, with the number of customers in New South Wales, Victoria, South Australia and the ACT growing by 68,494 in 2021.

“Every house added to the gas network is one which will later need to be taken off it,” Grattan said.

“There is little point trying to encourage homes to upgrade to all-electric if new connections to the gas network continue to grow – it’s like pouring water into a bucket with a hole.”

To reverse this trend, Mr Wood said state governments should start by setting dates for outlawing new gas connections to align with net zero by 2050, particularly because many gas appliances have 10- to 15-year life spans.

But if governments take too long then too many households will buy the next generation of gas appliances rather than electric ones, requiring an early replacement to achieve net zero.

“There’s a good chance you’re replacing your hot water system every 10 years, so it’s about giving people plenty of notice,” Mr Wood said.

“If the industry knows there’s going to be increasing demand then you will see investment [and] lower prices.”

Costly transition

Governments must do more than set the stage for sunsetting gas, though, with the Grattan Institute also finding many families will need taxpayer help to make the transition to electric appliances.

More than a third of households are either renters, have low incomes or simply don’t have enough money saved to bankroll a shift from gas to electric appliances, Mr Wood said.

“Though electric homes eventually save occupants money, there is still a purchase cost gap between gas and electric appliances. As a result, many low-income and low-savings home owners will struggle to upgrade from gas to electric,” Mr Wood said.

Existing government schemes, such as the federal government’s $1 billion electrification package in the 2023 budget, will be vital to escalating change, he said.

But further support will be needed, including the provision of low-cost loans and subsidies.

Taxpayers should be provided with electrification loans until at least 10 per cent of homes that have gas upgrade to electric, which should push the products into price parity, Mr Wood said.

“Governments need to be a whole lot more focused.”

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