Coalition and Labor agree on bill busting benefits of electrification, and kicking gas out of homes

When Victoria’s Labor government first announced plans to ban gas network connections in new homes and government businesses in the state, as the first stage of its Gas Substitution Roadmap policy, Queensland National Party senator Matt Canavan was apoplectic.

“This is not going to do one thing for climate change or to save the planet,” he fumed to Sky News in July 2023. “This is all about control, it’s all about a group of politicians that like to control what you do … and in this case, how you heat your home.”

Victorians struggling with cost of living need to be heard on “these sorts of issues,” Canavan said.

So it must have been tough for Canavan to sit through the federal Senate inquiry into residential electrification and hear from expert after expert about the huge energy bill cost savings – and multiple other benefits – available to households that switch out gas appliances for efficient electric alternatives.

And it must have been tougher, still, for the fossil fuel-loving, “drill baby, drill” senator to put his name to the final report from the Coalition-led Committee that recommends federal and state governments work together to promote and coordinate the uptake of home electrification.

Could it be that getting gas out of homes has quietly become a point of consensus in Australia’s notoriously conflict-ridden energy policy landscape?

All about the inquiry and what it determined

In June 2023, the Senate referred an inquiry into Australia’s residential electrification efforts to the Senate Economics References Committee, to investigate the benefits of and barriers to residential electrification, how it might be supported and how quickly it needs to be done.

The committee was led by the Coalition’s Andrew Bragg, the federal Liberal senator for New South Wales better known for putting together common sense legislation to improve financial services. It also included Canavan and a range of Labor and Greens senators.

Tabled on Monday, the Residential Electrification report outlines a “pretty strong consensus position” that households will save money by shifting from gas to electric appliances and systems, says Rewiring Australia CEO Francis Vierboom.

“The Coalition has chosen to publish this and that is positive news. It’s a really good thing they’re taking this step to understand the importance of household electrification,” he told Renew Economy.

The report determines that residential electrification is a “significant measure for achieving better energy outcomes in Australia” – and that, with leadership and coordination, it could improve household energy efficiency and help chip away at national emission reduction targets.

“Electrification has the potential to improve household energy efficiency, reduce emissions from residential energy use and lower energy costs for consumers,” the report says.

“Evidence from inquiry participants also highlighted several other opportunities associated with residential electrification,” it adds. “For instance, the committee heard that the efficiency of electric appliances can result in reduced household energy costs and offset energy price inflation.

“Further, the manufacture and installation of residential electrification technologies is anticipated to create thousands of new jobs.”

But the report also notes that many households face cost and structural barriers to accessing the benefits of residential electrification – barriers that, if not addressed by governments, risk excluding households on low incomes, or that rent or live in apartments.

To this end, the committee heard that further – and better targeted – financial supports are needed to help Australians electrify their homes. And governments of all stripes and at all levels, and particularly at a national level, must be on the same page.

“Managing Australia’s residential electrification transition will require significant collaboration across the Australian community, with governments, industry bodies, financiers and energy consumers all having a significant role,” the report says.

“In the committee’s view, there is significant scope for the Commonwealth government to coordinate Australia’s residential electrification transition, particularly given the difficulty of balancing the pace of the transition to meet emission reduction targets while managing pressures on our energy grid.”

Some points of contention

There do, however, remain some points of contention on how to go about getting gas out of homes.

The committee refers to the importance of consumers being given “genuine choice about the electrification upgrades they may wish to make,” which it says is particularly important for maintaining social license in the shift to net zero emissions.

It also notes that for many households the most affordable option – “in the short term” – is to keep existing gas appliances.

“Federal and state governments should be mindful of this when implementing electrification policies and consumers should not be unduly prevented from maintaining gas appliances,” the report says.

“As such, the committee is concerned that approaches of some state and territory governments to ban residential gas connections may be an ideological approach that is not supported by a sound evidence base.”

The higher upfront cost of electric appliances is not something that electrification advocates ignore, with many policy proposals recommending the phase out of gas appliances only at the end of their useful lives.

That said, a major new report from Rewiring Australia suggests that electrification has now passed the “tipping point,” in that the cost of investing in electric appliances is cheaper over the 15-year lifetime of that appliance than the gas alternative, even if the gas alternative is cheaper up front.

A separate report released on Wednesday by IEEFA – in this case focused on potential cost savings for Victorian consumers – shows that state’s shift to all-electric homes could save households up to $6.3 billion in energy bills over 10 years, but will need to be implemented quickly to address gas supply gaps.

Overall, the consensus from the inquiry is that home electrification, with a range of supports to decrease consumer financing costs and backed by the ongoing rollout of rooftop solar and home battery storage, is the way to go – to cut energy costs for consumers, cut household emissions, and free up more gas for hard to abate sectors.

It is also agreed upon that better national coordination is needed, to get electrification done right.

“At the national level, effective policies will make it easier for Australians to electrify their property and provide certainty for those making considerable investments to support Australia’s decarbonisation efforts,” the report says.

“Implemented well, such policies will improve the quality of Australia’s electrification transition and compound the benefits experienced by Australians.”

Timing is everything

The release of the report, in the first weeks of official campaigning ahead of the May 03 federal election has been a bit of surprise.

Renew Economy has been told that publication had been delayed until after the election in July, but instead it was published on Monday following fierce lobbying from Parents for Climate.

“We know what this report contains,” Parents for Climate CEO Nic Seton told Renew Economy on Wednesday.

“We knew before it was published that this report contains a strong and potentially permanent pathway to cost of living solutions for the majority of Australian households.

“It demonstrates common sense and uncharacteristically bipartisan support for an equitable and sensible solution to energy costs.”

Seton says it’s a strong indication that consensus is building across all parties that consumer energy resources are an essential part of the puzzle for dealing with cost-of-living issues, as well as solving grid-related problems.

“We know from our conversations with all sides of politics that these policies are on the table,” he says. 

“We just need to see the leadership from all parties to come out and make these serious commitments ahead of the election, so Australians know what they’re voting for.”

“We need to see leadership. There’s been this game of chicken which is wasting time and costing families more money.”

A study by Parents for Climate last year found 84 per cent of families either want to electrify their homes or are already doing it – and those who can’t are locked into paying higher prices for energy.

If the release during an election campaign signals tacit support for the concept of household electrification, some Liberals were expressing explicit support online. 

Now where’s the action?

What Seton wants to see, now, is the major parties throwing their support behind what he says has long been understood by experts: electrification is the best and quickest way to permanently bring down power bills.

“While it’s refreshing to see these common-sense findings are supported by a cross partisan committee, we’re yet to see the major parties reflect these permanent solutions to cost-of-living pressures in their election platforms,” Seton said in a statement on Wednesday.

“Australian families who are struggling with the cost of living need major party platforms to reflect this common sense. All party platforms need to clearly demonstrate how they’ll support cost-saving clean energy upgrades for families.”

Rewiring Australia’s Vierboom, too, is keen to see some policy progress.

“We know what needs to be done, and we know many will need help with making the switch. But the long-term savings are hard to dispute,” he said on Wednesday. 

“We hope this report signals a willingness from the Coalition to consider electrification policies, in order to help all Australians get on top of energy costs.”