Victoria must do something about gas – but there are smarter options than digging for more

When it comes to gas, Victoria is very different from other states. As the Australian Energy Market Operator has pointed out, Victorian winter gas demand is about three times summer demand.

And on very cold days, it is more than four times average summer demand. AEMO, in its 2019 Victorian Gas Planning Report expects Victorian gas production to decline in coming years, though it would still produce more than Victorians use.

Yes, Victoria has been and still is a significant net exporter of gas, which is not the impression gained from the federal government or the gas industry.

So Victoria has a winter gas supply problem, as daily production now averages around 950 TJ, and AEMO expects this to drop to around 670 TJ/day on average by 2023 – well below winter seasonal demand.

Figure 3: Average daily demand by month with 1-in2 and 1-in-20 peak day demand forecasts (TJ/d)

As usual, the gas industry and governments focus on solving this problem with increased production based on more exploration. Or importing LNG.

We need to start by asking how we are using gas, especially in winter.

It’s pretty obvious from the AEMO graph that winter use is dominated by heating thermally poor buildings using inefficient gas technologies.

Figure 1: Annual production (petajoules per year) by location

So the obvious first step is to identify high winter consumers, and help them to cut their gas waste. Gas retailers know who they are, but don’t seem to have much of an incentive to help them cut gas use.

Retail gas prices actually decline as usage increases, so retail pricing is not sending sensible messages. And outdated government policies developed more than a decade ago encourage gas use over electricity.

Targeted programs that tackle thermally poor buildings and equipment with high winter gas demand are likely to be very cost-effective.

Use of billing data and data analytics could focus effective action. Most Victorian buildings are appallingly inefficient, and poorly designed gas heating, hot water and industrial systems magnify this waste.

Fuel switching to heat pumps (often called reverse cycle air conditioners) for heating can also help at zero net capital cost, while reducing running costs.

As heat pump advocate Tim Forcey points out, many households and small businesses already have reverse cycle air conditioners that could heat their buildings cheaper than gas

They just don’t realise it. An education campaign should be an easy option for government.

Then we can move on to look at the inefficient distribution and standby gas losses from gas systems, and the potential for replacement of fundamentally inefficient and inflexible industrial and commercial processes with high efficiency, flexible and controllable electric technologies.

Much of this change would be cost-effective.

Yet somehow we end up bogged down in debates about gas exploration and LNG gas terminals. I find this quite bizarre.