Victoria's Gas Substitution Roadmap

Gas
Substitution
Roadmap
Traditional Owners acknowledgment
We acknowledge and respect Victorian Traditional
Owners as the original custodians of Victoria’s land
and waters, their unique ability to care for Country
and deep spiritual connection to it. We honour
Elders past and present whose knowledge and
wisdom has ensured the continuation of culture
and traditional practices. We are committed to
genuinely partner, and meaningfully engage,
with Victoria’s Traditional Owners and Aboriginal
communities to support the protection of Country,
the maintenance of spiritual and cultural practices
and their broader aspirations in the 21st century
and beyond.
Contents
Minister’s foreword 3
Protecting Victorians against high gas prices 4
Executive summary 6
Enabling choice and removing barriers to electrification 7
Gas Substitution Roadmap at a glance 8
1 Introduction 15
Public consultation activities supporting the Roadmap 17
Fossil gas today 20
2 Actions to support electrification, lower energy bills and decarbonise the gas sector 23
Promote consumer choice, help households upgrade to electric appliances, lower energy bills 24
and improve energy efficiency of homes
Helping Victorian businesses cut energy bills 32
Unlocking alternative gases and establishing a hydrogen industry 36
Maintaining gas reliability throughout the transition 40
Preparing the future workforce 44
Reducing fugitive emissions 48
Transitioning Government’s own gas use 50
3 Next steps 55
Appendix 57
The Roadmap multi-sector scenario modelling 58
1
MINISTER’S FOREWORD
The Hon. Lily D’Ambrosio MP

Minister for Energy
Minister for Environment and Climate Action
Minister for Solar Homes
Clean energy produced by household solar panels combined with modern,

energy efficient electrical appliances is now the most cost-effective way
to warm Victorian homes in winter, cool them in summer and power our
households throughout the year.
And with gas prices rising steadily, and international Our next step in easing cost of living is our Gas
events causing uncertainty in gas supply and price Substitution Roadmap. It means we continue to do
around the world – it’s time we gave Victorians more the work to make energy more affordable for more
choice when it comes to the future of our energy supply. people and get Victorians the best deal when it
Historically, fossil gas was the cheapest source of comes to their home energy.
fuel to heat Victorian homes during winter. While our This Roadmap is also the next stage in our work to
state currently processes more than enough gas for transition away from fossil gas and towards zero
its own needs, it’s getting too expensive, because emissions energy that delivers cheaper bills for
Victorians are at the mercy of private companies households and businesses.
exporting gas overseas, which has a real impact on The Roadmap lays out initiatives to protect Victorians
the cost to Victorians at home. against high gas prices and gives every Victorian the
This is a Government that puts money back in confidence that their energy is reliable – now and
people’s pockets. We’re already doing it, with our into the future.
landmark Solar Homes Program, Victorian Energy
Upgrades (VEU) and through the Government’s
$250 Power Saving Bonus – for which every single
household in Victoria is eligible to claim.
The key changes described in this Roadmap include:

• Expanding the VEU scheme, with new incentives for switching to efficient electric appliances
• Phasing out VEU incentives for fossil gas residential appliances by the end of 2023
• Changes to the Victoria Planning Provisions in 2022 to remove the requirement for new housing
developments to be connected to gas
• Retiring Victoria’s 6 Star National Construction Code variation to allow for more efficient hot
water systems as part of new construction and major renovations
• Move to a 7 Star Standard for new home construction, this standard takes account of home energy
appliances and not just the thermal shell of the building, driving greater energy efficiency from the
point of design
2 GAS SUBSTITUTION ROADMAP

These changes are all about providing greater choice Victoria’s strong industry and manufacturing
– there are no penalties for people who continue to capability means the state is well-placed to build
use gas, just advice, options and support for those greater capacity to work with different types of
who want to make the change. Because we know fuel and equipment, and to attract investment in
households and businesses make these decisions zero emissions gas substitutes, like hydrogen and
every day as they build or renovate homes, or replace biomethane for businesses that can’t readily switch
old appliances. The Roadmap delivers policies that to electricity, to Victoria. This has the potential
will make it easier for Victorians to make choices that to create sustainable and clean energy jobs for
will save them money and reduce greenhouse gas Victorians, in Victoria.
emissions to protect our people and our planet. We’re committed to a just and equitable transition
Switching over to solar or electricity, from gas, means that ensures energy affordability, reliability, security
cheaper gas bills – this is good for people. It’s also and safety for all Victorians.
good for our planet. With over two million Victorians using gas in their
Victoria has set ambitious emissions reduction homes and businesses, the Victorian Government
targets to halve emissions by 2030 as we transition recognises the need to work with households and
to a net zero emissions economy by 2050. To achieve businesses throughout the transition.
these targets we must cut emissions across the The Victorian Government will continue to ensure
entire economy, including the gas sector, which that we have adequate gas supplies, as well as
contributes around 17 per cent of Victoria’s net strong regulations to support a gas market that
greenhouse gas emissions. works effectively for all Victorians.
The transition will harness Victoria’s existing Making a choice to move away from gas is good
competitive advantages, including extensive for the planet, great for household budgets and
gas networks, a highly skilled gas workforce, and welcome assistance to the cost of doing business.
world‑class education and research institutions.
3
Protecting Victorians against high gas prices
High international gas and coal prices as a result of the conflict in Ukraine,
as well as domestic factors – including flooding in New South Wales and
Queensland affecting coal supplies and several outages at coal-fired generators
driving up demand for gas-powered generation, and unusually cold early
winter conditions – have led to unprecedented price impacts on wholesale gas
and electricity markets. Whilst these factors are likely to ease over time, the
international market remains uncertain and price volatility may continue.
Since the commencement of gas exports Victoria is strongly supportive of a timely process to
overseas from Queensland Liquefied Natural Gas consider a redesigned east coast gas mechanism
(LNG) plants, gas prices have been linked to the to prioritise domestic consumers and protect
international market. Victoria processes more gas Victorians from these high wholesale prices.
than it consumes and supports gas consumers The Victorian Government acknowledges that gas
in other east coast states. Collectively, Australia market regulators should have the tools they need
produces large amounts of gas – far more gas to properly monitor and report on the health of the
than the nation consumes – however much of this market. This, along with market reform to increase
is exported overseas. The Victorian Government market transparency, is important to enhance
has long advocated for strong and effective gas competition in the gas market and promote
export controls to prioritise gas for domestic fairer pricing.
use and to ensure Australians pay a fair price for
Australian gas. Victoria is also supportive of the Commonwealth
Government taking action to support small to
Victoria supports the Commonwealth Government medium enterprises (SMEs) and large commercial
taking action to reduce the impact of international and industrial (C&I) customers, complementing
gas prices on the domestic energy markets. The supports already available from the Victorian
current design of the Australian Domestic Gas Government. The Commonwealth has a wider range
Security Mechanism (ADGSM) means that it of levers than states and territories to provide SMEs
primarily serves to address the risk of a domestic and C&I customers with financial support.
gas shortfall, not as a mechanism to provide
pricing relief and certainty to domestic users.
4 Gas Substitution Roadmap

Recognising the need for urgent action, the Victorian Government
has a range of supports in place to assist households and
businesses in managing higher energy costs, including:
The $250 Power Saving Bonus which will help ease the cost of living for Victorian households
The energy concessions program which provides 17.5 per cent discount off gas
and electricity bills for eligible concession card holders
The utility relief grant scheme which provides up to $650 per utility every two-years to
low‑income Victorians experiencing unexpected hardship to pay utility bills
The comprehensive Payment Difficulty Framework under which retailers must offer
tailored assistance to residential customers with arrears
Small businesses as well as households can use Victorian Energy Compare to compare
their offer to others in the market and ensure they are on the lowest-price offer available
Retailers must give written notice to households and small businesses of price rises
with clear advice about whether the customer is on the retailer’s best offer
The Victorian Government recognises that these Government programs are important to assist
relief measures must be coupled with longer-term Victorians with upfront costs of efficient electric
investment in activities such as energy efficiency appliances, including the Victorian Energy
and electrification that will unlock even greater Upgrades program and the Solar Homes Program.
energy bill savings. Policies that enable construction of all-electric
Switching from gas to efficient electric appliances homes will also provide occupants of new homes
will help households to save money on their energy with lower running costs, relative to dual-fuel
bills. For example, an existing detached dual-fuel homes. The Minister for Planning is progressing
home with rooftop solar photovoltaic (PV) that changes to the Victoria Planning Provisions, to take
moves from using gas for heating, hot water and effect in 2022, that will remove existing barriers to
cooking to using efficient electric appliances all-electric new developments.
could reduce its average energy bill by around The Victorian Energy Upgrades program is also
$1,250 per year. For a household without solar, being revised to further assist SMEs reduce their
going all‑electric could save around $1,020. energy consumption and costs by improving
With rising energy prices, the savings from energy efficiency. SMEs are also being supported to
electrification increase. Firstly, a fully electrified install solar panels through the Solar for Business
household is no longer exposed to rising gas bills. Program, empowering businesses to generate
Secondly, the efficiency of some electric appliances their own electricity and minimise their bills.
is significantly higher than their equivalent gas The Business Recovery Energy Efficiency Fund
appliance. This means a household’s exposure (BREEF) also provided grant funding to businesses
to higher electricity prices is also reduced (for to support energy efficiency and demand
example, a multi-split air conditioning system management projects.
replacing a gas ducted heating system, is at Additional changes to the VEU will expand
least five times more efficient in delivering the incentives for residential electrification and remove
same amount of heat into a building). Finally, incentives for residential fossil gas appliances by
electrification benefits increase further again the end of 2023.
where solar panels are installed.
5
Executive summary
Many Victorians still believe gas is a cheaper energy source than electricity.
This used to be the case, but for too long now gas prices have been rising steadily
around the world.
Very high gas and coal export prices driven by these Energy affordability and reliability are priorities
international events have also impacted national for the Victorian Government. Using less fossil gas,
electricity markets, emphasising the need to further through energy efficiency and electrification, can
accelerate investment in low-cost renewable lower Victorian consumers’ energy bills by reducing
electricity generation. their exposure to high gas prices. It can also free
The rapid investment in low-cost renewable up gas for industrial and other uses that cannot
electricity generation in Victoria, combined with the be readily electrified, and provide time to develop
much higher efficiency of many electrical appliances, and scale up industries that supply renewable gas
has reduced the cost of using electricity for home and hydrogen.
heating, hot water and cooking. Some Victorians The Victorian Government is committed to reaching
are making the switch already, but we know that for net zero greenhouse gas emissions by 2050 and,
many families and businesses there is an attachment recognising the need to act now on climate change,
to their current appliances, such as gas cooking, has set ambitious emissions reduction targets to
or a lack of information about the effectiveness of halve emissions by 2030.
alternatives like heat pumps or using reverse cycle Achieving this interim target is crucial to drive
air conditioners as home heaters. Decisions about the investment needed in current and emerging
home appliances can be complicated, but just technologies, grow jobs in clean energy, meet
as technologies like solar PV eventually became Victoria’s net zero emissions targets, and help
mainstream, the early adoption of efficient electric transform Victoria to a world-leading clean economy.
appliances today will help pave the way for wider
uptake in the future. In the meantime, it is critical to Achieving our interim emissions reduction targets
focus on helping people to understand their choices will require us to cut emissions across the entire
and removing barriers to uptake, so bills are cheaper economy, including the gas sector which contributes
and we reduce greenhouse gas emissions. about 17 per cent of Victoria’s net emissions.

Enabling choice and removing barriers to electrification
efficient, all-electric homes
Incentives Policy and regulatory change
Victorian Energy Upgrades Victoria Planning Provisions to be changed

badge-percent Discounts for energy-efficient products
fire-flame-simple to remove gas connection requirements
for new residential subdivisions
Solar Homes
sun Rebates for hot water, solar PVs leaf
Planning Scheme changes are
underway through the Environmentally
and batteries
Sustainable Development Roadmap to
strengthen support for energy efficiency
7 Star Homes Program
house-circle-check Improving construction supply chains
and renewables
Plumbing Regulations will be aligned with

shower changes to the National Construction
Code 2022
Until recently, fossil gas was considered a lower The combination of energy efficiency, electrification
carbon transition fuel. However, the transition of and alternative gases (such as hydrogen and
the electricity grid to 100 per cent renewable is well biomethane) will provide the best pathway to
underway and accelerating. decarbonise the gas sector.
It is particularly critical for Victoria to proactively The Roadmap takes this transition forward –
prepare for and manage the shift to renewables highlighting priorities for policy and reform
because we have the highest use of gas for heating, designed to unlock these technologies.
cooking and hot water in Australia. This transition will
involve guiding an orderly decarbonisation of the gas The Roadmap builds upon the record $1.6 billion
system over the long term. The Roadmap represents investment in Victoria’s clean energy future, committed
the start of this journey. in 2020, and is complemented by $331 million in the
2022-23 State Budget, to reduce emissions, secure
Decarbonising the gas sector requires immediate
Victoria’s energy grid and drive down energy prices.
investment in the existing technologies that are
available now – energy efficiency and renewable This Roadmap includes several initiatives to help
electricity – and in the new technologies that can households and small businesses invest in modern,
play an increasingly larger role in the future, such as highly efficient electric appliances and transition
hydrogen and biomethane. away from old gas appliances. This first package of
actions will promote choice and address outdated
regulatory barriers to deliver more all‑electric homes
and buildings.
7
Gas Substitution Roadmap
at a glance
Priorities for policy and reform, and opportunities for Victoria
Transition
Government’s
own gas use
Deliver more
all‑electric precincts
Remove regulatory barriers in 2022
All electric, efficient homes
Promote consumer choice, help households

upgrade to efficient electric appliances, lower
energy bills and improve efficiency of homes
Industry
Continue to assist industry to

improve efficiency, electrify and
prepare to take up alternative gases
Complemented by $331 million in 2022 to reduce energy emissions,
secure Victoria’s energy grid and drive down energy prices.
Builds on $1.6 billion for clean energy in 2020.
Build skills
and capability
To realise opportunities
from gas sector transition,
including grants in 2022
Help Victorians
cut energy bills
Unlock renewable gases

and scale up hydrogen industry
Build on the growing number of innovative hydrogen

projects including the Hume Hydrogen Highway
Maintain gas reliability

throughout transition
New investments from 2023,

new market mechanisms from 2025
Removing barriers and enabling choice Victoria is also committed to raising energy
efficiency standards for new homes under changes
At the centre of the transition to efficient, electric to the National Construction Code (NCC). Proposed
homes, is the Victorian Energy Upgrades (VEU) changes include increasing building efficiency
program, which will evolve and expand in 2022. from 6 to 7 stars and strengthening standards
The VEU program has provided households and for fixed appliances such as heating and cooling,
businesses with discounted energy efficient products hot water and lighting. At the same time, the
for more than a decade. The program will now be Plumbing Regulations 2018 will be aligned to ensure
strengthened to support the shift to electrification. consistency with the changes to the NCC 2022. These
Government will develop new incentives through changes will provide more choice to Victorians and
the VEU program to help replace gas water heating make homes cheaper to run, more comfortable to
and space heating with efficient, low-emissions live in and more resilient to extreme weather.
electric equipment while phasing out incentives
Households will also be given new information to
for all residential gas products by late 2023. The
help Victorian consumers lower their energy bills
program will also provide new electrification options
and better understand the benefits of switching to
and support for business, while continuing to help
efficient electric alternatives.
those businesses who can’t shift off gas to make
their operations more efficient. The Government will These incentives and reforms build on existing programs:
shortly be releasing discussion papers regarding • The 10-year $1.3 billion Solar Homes Program, which
these changes and will work with industry to is providing 778,500 rebates to support Victorian
implement them seamlessly. households to install solar PV panels, solar hot water
Government will implement changes in 2022 to the and electric heat pumps, or battery systems at home
planning system to remove barriers to all-electric • The Solar for Business Program, which is
homes and new developments and support the take supporting 15,000 Victorian businesses to install
up of efficient electric appliances. Amendments to solar PV systems at their work premises
the Victoria Planning Provisions will allow developers • The Big Housing Build program, with thousands
and homeowners to choose all-electric new homes. of new energy efficient public housing units being
built and upgrades of 35,000 social housing
units underway, with all-electric specification
wherever possible
Some users cannot readily electrify, and they will
require alternative gases as a gas substitute. This
Roadmap describes regulatory and policy reform
that will move the market towards a renewable
energy future, while maintaining reliability, by
developing frameworks to assist the large-scale
uptake of renewable gases and hydrogen.

Together, these programs and policy reforms are expected to deliver major benefits to Victoria:
• Help Victorian households save on their energy bills by taking up rebates to switch to efficient
electric appliances – with a focus on vulnerable Victorians.
• Free up a diminishing resource for industries and processes that rely on fossil gas, and improve
energy security and reliability
• Support over 2,200 jobs and industry development, while reskilling and preparing the Victorian
workforce to take up these sustainable employment opportunities
• Attract hundreds of millions of dollars of private investment to Victoria, including regional areas,
and establish a thriving new hydrogen sector
figure 1 Roadmap program logic
Challenges Actions Outcomes
Gas is becoming Drive energy efficiency Reduce energy bills

search scarcer – increasing solar-panel and electrification file-invoice-dollar for households and
risk to reliability businesses
Regulatory reform
money-bill-wave
Gas is becoming house-circle-check for all‑electric homes
fire-flame-simple
Free up gas for
more expensive – industry and improve
exposing consumers access to affordable,
Support take up of
to higher bills reliable supply
alternative gases
such as hydrogen
Climate change action More energy-efficient
cloud-arrow-down requires emissions
and biomethane building-circle-check buildings
reductions from
Maintain gas reliability
all sectors pipe-circle-check through infrastructure
cloud-arrow-down
Reduce emissions
and market reform
Build skills and Support clean

graduation-cap capability user-helmet-safety energy jobs
11
The Roadmap is informed by significant modelling and analysis,
solar-system and extensive stakeholder engagement.
Modelling undertaken for the Roadmap found that emissions from Victoria’s fossil gas sector
may remain unchanged or even increase without immediate policy action. This analysis found
that a combination of technology pathways – including switching to electricity, use of hydrogen
and biomethane and energy efficiency – will better meet the energy needs of Victoria’s diverse
gas users than using any single technology pathway on its own. Electrification and energy
efficiency will play a dominant role in reducing gas use this decade, and renewable gases and
hydrogen will also be essential for the sector to reach net zero emissions.
Modelling has demonstrated that electrification reduces emissions and reduces
plug-circle-check household energy bills – effective immediately.
For example, an existing detached dual-fuel home with rooftop solar that converts to
efficient electric appliances could save around $1,250 per year. For an existing detached
home without solar, going all-electric could save around $1,020 per year. Further analysis
demonstrated the significant value – both upfront and over time – to new home buyers of
electrifying new homes.
Lowering energy bills is a high priority for the Victorian Government. That is why the
Government is continuing to provide innovative programs that help Victorian homes and
businesses access these savings by installing efficient electric appliances. The Roadmap
analysis also finds that improving energy efficiency is critical to save on energy bills and
remains an important way of reducing emissions over the next decade. This Roadmap
outlines reforms to planning and building regulations, and action to implement higher
standards for new homes and to lift standards for commercial buildings in 2025.
Consumers – particularly vulnerable households and gas-reliant businesses – will need
help to switch from gas to efficient electric appliances where they make a choice to do so.
The Government’s programs are targeted to support those most in need.
Electrification reduces demand for fossil gas, freeing up gas for industrial users
meter-fire to secure it on more affordable terms.
The modelling shows that widespread electrification does not materially increase energy
costs for users that do not switch, as increases in gas network tariffs (driven by declining
volumes) are largely offset by reduced price pressure in the wholesale gas market. Effective
and efficient regulation can help minimise network costs.
We must ensure Victorians can access affordable and reliable energy throughout
pipe-circle-check the transition.
This need is particularly acute given recent unprecedented increases in east coast
wholesale gas and electricity prices. The Roadmap outlines a range of actions the
Victorian Government is taking to protect consumers from exposure to high and uncertain
international gas prices and the actions that the Victorian Government is taking to
accelerate the shift to low-cost renewables.
Even under the challenging conditions of winter 2022, Victoria has continued to play a
critical role in supporting the east coast gas market, with gas processed in Victoria also
flowing into northern states. This continues the role Victoria has played for many years as
a net exporter of gas to the east coast market, meeting both its own needs and providing
significant exports to New South Wales, the Australian Capital Territory, South Australia
and Tasmania. For example, in 2021 Victoria processed 331 petajoules (PJ) out of the 553 PJ
used for domestic consumption in Australia’s east coast gas market.
Recognising the growing pressure on Victoria’s traditional sources of gas and the wider
gas market, the Roadmap includes important measures to maintain the reliability of gas
through the transition.

pipe-circle-check
The Victorian Government has supported the planning of, and investment in, necessary
production, pipeline and storage projects to support reliable and secure gas supply, and
is driving market rule changes to support increased gas storage. In 2022, the Victorian
Government has actively ensured the following critical infrastructure projects:
• In March 2022, granting the pipeline licence for APA Group’s Western Outer Ring Main
project. This project will improve the reliability of Victoria’s gas transmission system and
will allow more gas to flow into storage at the Iona Underground Storage facility in the
west of the state.
• Also in March, Esso Australia confirmed it would invest $400 million to deliver an
additional 200 PJ of gas over five years, with about 30 PJ to come online in 2023.
• In April 2022, the Victorian Government provided written support for the APA Southwest
Pipeline expansion project, which subsequently passed through Final Investment Decision.
Alternative sources of gas will be essential for the gas sector to reach net zero
emissions – and analysis indicates that action is needed now to develop options such
as hydrogen and biomethane.
These options are particularly important for some industrial energy users, with activities
that are harder to electrify.
Recognising this, the Victorian Government has supported universities, energy companies
and other innovative organisations to advance hydrogen technology and to prepare
to produce, and use, hydrogen at scale. In March 2022, the Government provided
$10 million for a renewable hydrogen highway transport backbone along Victoria’s
busiest freight corridor, in addition to grants provided through the Renewable Hydrogen
Commercialisation Pathways Fund and Renewable Hydrogen Business Ready Fund.
Funding has been provided to most major Victorian universities, for hydrogen skills and
products, through the Victorian Higher Education State Investment Fund.
As renewable gases and hydrogen are taken up at increasing scale, including blending in
the network, effective market frameworks will be needed for cost recovery. Exploring these
options – including a nationally consistent approach – will be a priority for Victoria. The
Victorian Government has been leading on major reforms to enable a nationally consistent
approach to regulating hydrogen blends and other renewable gases to facilitate blended
hydrogen in the Declared Wholesale Gas Market. The Victorian Government will consider
establishing a renewable gas scheme, and renewable gas targets, to help drive investment
in gas substitution and guide transition planning for businesses, consumers and energy
market participants.
The impacts of the transition of the gas sector to net zero emissions will be profound
user-helmet-safety and far‑reaching over coming years. An equitable transition is essential.
This transition brings tremendous opportunities for Victoria. New employment will emerge,
such as in retrofitting buildings, making and installing efficient equipment, building new
infrastructure, and producing biomethane and hydrogen. The Government will seek to
retrain and reskill workers to take up these jobs.
The Gas Substitution Roadmap is just the beginning of the journey to a net zero emissions future.
There is more to be done and collaboration across the Victorian community is vital to ensure the
journey is smooth and well-coordinated. The Victorian Government is committed to continuing
its engagement with all stakeholders as it progresses the actions set out in this Roadmap and
continues to plan the path to net zero emissions, with regular public updates, starting in 2023,
to this Roadmap process.
13
1
Introduction
Gas is an important energy source for many

Victorians, and despite Victoria still processing
more than we consume, it is becoming more
expensive primarily due to increased export of
gas nationally, creating greater competition
for Victorian resources, as well as, more
recently, international supply disruptions.
15
Many Victorians have faced higher gas bills in the last three years, with the trend
towards higher gas prices influenced by links to international prices. Indications are
that global events will continue to place upward pressure on global gas prices.
Recent events in Ukraine and Russia are already having emissions by 2050 and has set emissions reduction
energy market impacts, including international gas targets to halve emissions by 2030 to get us there.
prices increasing dramatically and impacting domestic Achieving our interim targets, and ultimately net zero
gas prices. This is on top of existing predictions that emissions, will require us to cut emissions across the
domestic gas prices will rise into the 2030s due to tight entire economy – including from the use of fossil gas
supply.1 Alongside price pressures, tight supply is also by households, industry and commercial businesses.
increasing the risk to gas supply reliability. The Roadmap will help Victoria achieve these interim
Over two million Victorian households and targets and navigate the path to net zero emissions,
businesses currently use fossil gas. The Victorian while helping guide the gas sector through the
Government is taking steps to support a reliable unprecedented changes it already faces, in light of
and affordable supply, while freeing up gas for other global pressure on gas supply and record prices, and
customers, particularly industrial customers who depleting local gas supplies. For many households
are reliant on gas to continue manufacturing. These and businesses this will be a big change, and the
actions include exploration and production of new Government won’t be forcing people to make the
gas resources to ease pressure in the short term, but switch before they are ready. But with such clear
the longer term solution is to shift away from the use benefits for many consumers, we can start the
of fossil gas. To give more Victorians more choice, the transition by encouraging and assisting those that
Victorian Government is acting to remove barriers want to reduce their dependence on gas.
to all-electric homes, making it easier for Victorians The Roadmap sets out what we have heard from the
that wish to switch away from gas, to do so. Analysis Victorian community and industry in submissions to
for the Roadmap shows that, for many customers, the Roadmap Consultation Paper and through other
switching to efficient electric appliances will provide consultation (see page 17), and advice of others,
significant savings on their energy bills. including Infrastructure Victoria. And the Roadmap
At the same time, the gas sector must decarbonise has been informed by detailed multi-sector
if Victoria is to meet its interim greenhouse gas modelling, which examined potential transition
emissions reduction targets, on the path to net zero technologies and pathways for the gas sector
emissions in 2050. The Victorian Government is (see Appendix).
committed to reaching net zero greenhouse gas
1 Australian Competition and Consumer Commission, August 2021, July 2021 interim report; Lewis Grey Advisory, 2021, report to Australian Energy
Market Operator, Gas Price Projections for the 2021 Gas Statement of Opportunities – Public Version

Public consultation activities supporting the Roadmap
Reducing emissions on such a broad scale will affect many stakeholders.
The Victorian Government has sought the views of community and business
stakeholders to better understand the opportunities and challenges that
transitioning the gas sector to net zero emissions will bring.
This Roadmap has been informed by extensive community and industry consultation, including:
user-helmet-safety Stakeholder forums

Two stakeholder forums in February 2022, where findings of interim modelling were shared and
discussed by around 300 attendees.
More than 100 stakeholder interviews, conducted over 2021, to help inform analyses to support the Roadmap.
A series of stakeholder forums held in late May 2021, with representatives from the gas and electricity supply
industries, market regulators, consumer and social welfare organisations and environment and climate
change groups. These forums provided valuable insights into key issues for each sector. A public forum, held
on 13 July 2021, allowed for broader discussion of gas decarbonisation pathways and the Consultation Paper.
book Public Consultation Paper

A public Consultation Paper, released in June 2021, which presented a range of potential
decarbonisation pathways, as well as key issues related to the gas sector transition. A broad spectrum
of stakeholders participated in this engagement, representing Victoria’s diverse community, critical
commercial and industrial sectors, natural and built environments, and growing energy industry.
The consultation received 287 responses ‑ 150 from individuals and 137 from organisations.
oven Household consumer survey

To understand households’ preferences for gas and electric appliances for cooking, heating, cooling and hot
water. Current home owners, likely future home owners and landlords were all engaged through this survey.
industry-windows Targeted industrial gas user survey

Conducted confidentially in mid-2021 to understand energy management issues and the energy preferences
of industrial large users of gas and their capacity to switch to more sustainable energy sources.
comment Responses to the Gas Substitution Roadmap Consultation Paper
Industry body 21
Total submitters 287
Consumer body 19
Formal submissions 162
Responses to questions 208

Environmental group 16
287
Government 12
Individual consumer 150 Industry 12

RESPONSES
Tecnnology provider 10
Gas producer 9
Gentailer/Generator 6
Research/Education 6
Network representative 5
Gas network 4
Network operator/regulator 2
Electricity network 1
Other 14
17
figure 2 Alignment of Roadmap actions to stakeholder feedback
list-timeline comments clipboard-check

CONSULTATION PAPER ISSUE FEEDBACK ACTIONS AND OUTCOMES
Maintaining Potential challenge of inconsistent Energy efficiency and

industry-windows the reliability, gas blends and the need for controls electrification can free up gas for
affordability and industrial users
Reliability of supply continues to be
safety of gas supply highly valued including by industrial Maintain reliability by supporting
customers infrastructure investment
and making market and
There is a need to appropriately
regulatory reforms
balance reliability and affordability
Transitioning to more Transitioning away from gas is not Actions free up gas for
sustainable gaseous possible for every user industrial users
fuels with minimal Consumers need to be supported in Develop renewable gases –
disruption to end-users the transition building on hydrogen projects and
preparing the market for take up
at scale
Maintaining electricity Electricity system security was a Improve energy efficiency,

utility-pole-double reliability in light of new key concern in light of increased to manage demand
sources of demand electrification
Work closely with the market
Electric vehicles and other on demand and supply
decarbonisation impacts have to projections and to support timely
be considered infrastructure investment
Supporting Victoria’s Opportunity to leverage and Build skills and capability, through
user-helmet-safety workforce, industry transition existing skills to support Clean Economy Workforce Skills
and the institutions industry development Initiative, and provide support
to upskill to install electric and
that support them Requirement to act now to ensure
renewable technologies
there is not a skills shortage or
major job impacts
Managing uncertainty The transition will require Roadmap identifies priorities,

map-location-dot in the transition ongoing engagement across all advances all technologies,
representative groups and guides a considered and
ordered transition
Clear government planning and
goals, with the implementation
of a phased approach can help
reduce uncertainty
Transitioning the Opportunity to expand existing Incentives for efficient electric

money-bill-wave Victorian economy support programs to facilitate an appliances target vulnerable
efficiently and equitable transition consumers
scroll equitably Reform regulation to enable the Actions, including regulatory
transition by improving minimum reform for all-electric homes,
standards (e.g. of appliances; for enhance consumer choice
rental accommodation)
Training and upskilling for workers

Infrastructure Victoria’s advice
to the Victorian Government Parliamentary inquiry into
on gas infrastructure renewable energy in Victoria
The Gas Substitution Roadmap has been On 4 March 2020, the Victorian Legislative
informed by Infrastructure Victoria’s Council Environment and Planning Committee
was tasked with providing an update on
analysis of Victoria’s gas infrastructure
Victoria’s progress in the transition to
needs, as detailed in its Final Report,
100 per cent renewable energy.
Towards 2050: Gas infrastructure in a
As part of this, the Committee was asked to
net zero emissions economy.
identify the benefits and implications of the
transition, the public and private investment
required, how government could enable a just
transition, and what opportunities exist to
further reduce emissions.
In May this year, the Committee’s report, Inquiry
into renewable energy in Victoria, was tabled in
Parliament and included 32 recommendations
to government. The inquiry explored the
transition away from gas in Victorian homes
and businesses, and found that “switching
Victorian households from gas will contribute
significantly to lowering carbon emissions, save
household costs and help to avoid the health
risk associated with gas”.
The Victorian Government, through its
existing energy programs and through
the actions outlined in this Roadmap, has
already made progress on a number of
infrastructurevictoria.com.au/ these recommendations. The Government
project/infrastructure-victoria- welcomes the report and is currently
advice-on-gas-infrastructure/ considering recommendations.
19
Fossil gas today
Gas has been a crucial part of Victoria’s energy mix for many years, but with rising
gas prices and instability globally in regard to supply, this will need to change.
It will help achieve Victoria’s emissions reduction targets, while also improving
energy affordability.
Gas is an important energy option for many Meeting our emissions targets requires
Victorians. In fact, many Victorian households and
action to reduce fossil gas use
businesses currently consume more energy in the
form of gas than they do electricity. Gas is used Achieving the emissions reduction targets set out in
in all sectors of the Victorian economy, including Victoria’s Climate Change Strategy requires that all
in the manufacturing, construction, agricultural sectors of the Victorian economy make substantial
and chemical industries. The use of gas by around contributions to meeting these targets. Victoria
two million Victorian households and businesses for is on track to meet its 2025 emissions target, but
heating, cooking and hot water is currently greater action must increase if our state is to meet its more
than in any other state or territory in Australia. ambitious 2030 targets.
Using fossil gas also contributes significantly Victorian gas use and associated emissions have
to Victoria’s greenhouse gas emissions. Recent both grown since 2005, the base year for setting
estimates indicate that the gas sector contributes Victoria’s emissions reduction targets. Modelling
about 17 per cent of the state’s net emissions. 2 These undertaken for the Roadmap indicates that, if
emissions arise from burning gas directly for heat no action is taken, Victorian gas consumption
(‘direct combustion’) and from fugitive emissions will remain broadly at today’s levels for at least
associated with the production and transport of a decade.
fossil gas.
2 DELWP analysis of National Greenhouse and Energy Reporting scheme data and Australian National Greenhouse Accounts, 2019

It will take years to shift from our historic investment The priorities and commitments outlined in this
and reliance on fossil gas. To achieve our end Roadmap will promote consumer choice and help
goal of net zero emissions, action is essential now, guide planning and decision making of businesses,
through increasing energy efficiency, adoption of consumers and energy market participants. Over
efficient electric appliances across households time, the changed context and aspirations of
and businesses, and strategic investments and our community will be reflected in investments,
policy reform to build Victoria’s hydrogen and technologies will mature, and the private sector will
biomethane industries. build momentum in taking up gas substitutes.
Other renewable energy technologies, such as Over the course of the transition, more investment
geothermal energy and concentrated solar thermal and reform will be essential to accelerate the
energy, can be utilised to decarbonise gas. If proven decarbonisation of the gas sector. Government will
to be technically and commercially feasible in work with business, industry and consumer groups to
Victoria, these could become an important part of develop and put in place further actions to increase
decarbonising gas use. fossil gas substitutes and emissions reductions from
The Victorian Government is actively supporting the gas sector, for a smooth transition to net zero
the commercialisation of innovative, emerging emissions. Following the release of this Roadmap
renewable energy technologies through the Energy document, we will undertake further consultation
Innovation Fund. In the first round of funding, the with industry and the community, and publish
Government invested almost $38 million to support a Roadmap update in 2023 to further progress
three offshore wind projects. The second round was the transition.
open to any renewable technology type that met
the eligibility criteria, and funding outcomes are
expected to be announced later this year.
21
2
Actions to support
electrification,
lower energy bills
and decarbonise
the gas sector
23
Promote consumer choice, help households
upgrade to electric appliances, lower energy bills
and improve energy efficiency of homes
Victorian Government actions
Rebates and incentives to support efficient, electric homes
The Victorian Energy Upgrades (VEU) program supports households and businesses to reduce their
energy costs by installing energy efficient equipment. The VEU has been in operation for a number of
years and will now evolve to take advantage of electrification to deliver lower bills. The Government
will develop new incentives through the VEU program to help replace gas water heating and space
heating with efficient, low-emissions electric equipment while phasing out incentives for all residential
gas products by late 2023. The program will also provide new electrification options and support for
business, while continuing to help those businesses who can’t shift off gas to make their operations
more efficient. The Government will shortly be releasing discussions papers regarding these changes
and will work with industry to implement these changes. Replacing gas appliances with efficient
electric appliances has the potential to save households with solar panels around $1,250 per year.
For households without solar, going all-electric could save around $1,020 per year.

The Victorian Government’s landmark programs to support household electrification and lower energy
bills will continue to support efficient, electric homes:
The $1.3 billion Solar Homes Program is providing 778,500 rebates to support Victorian
location-dot households to install solar PV panels, solar hot water and electric heat pumps, or battery
systems at home. To date around 57 per cent of program applicants have had a combined
household income of less than $100,000 per year. More than 200,000 solar panel, battery and
solar hot water systems have been installed through the Solar Homes Program since its launch
in 2018.
The Home Heating and Cooling Upgrades program is supporting vulnerable and low-income
location-dot Victorian households to install efficient electric reverse cycle air conditioners for heating
and cooling.
The Big Housing Build program is well underway, with thousands of new energy efficient public
location-dot housing units being built, with all-electric specification pursued wherever possible. The Energy
Efficiency in Social Housing Program is also upgrading 35,000 social housing properties and will
not install gas appliances, with efficient electric alternatives installed instead.
Products eligible under these programs may also be reviewed to ensure that technologies provide
strong support for electrification, energy efficiency, and maximise consumers’ benefits from solar PV
and potential emissions reductions.
Removing barriers to all-electric developments and improving energy standards
The Victoria Planning Provisions, which give gas distribution businesses a formal approval power
location-dot for new residential subdivisions, will be changed in 2022, to remove the effective mandate to
connect to gas, giving consumers more choice about how they source their energy needs. This
will mean more all-electric homes will be available to consumers that want them.
The Victorian Government is proposing stronger efficiency standards for new homes to be
location-dot introduced through the 2022 National Construction Code (NCC), including a move to 7 stars
and new requirements for fixed appliances such as heating and cooling, hot water systems and
lighting, to come into effect. Victoria will also align the Plumbing Regulations 2018 to ensure
consistency with the changes to the NCC 2022, and to remove barriers to the installation
of efficient electric hot water systems, helping households to capture further benefits from
investing in solar panels, and supporting those who choose all-electric new homes. This change
is linked to stronger energy efficiency requirements for new homes, planned for adoption from
the last quarter of 2022 with a transition period.
Under NCC 2022, new homeowners and developers will be able to choose a mix of fixed
appliances that suit them (including heating, cooling and hot water) provided they meet the new
whole of home energy budget. The whole of home energy budget provides for installation of on-
site energy generation and storage (e.g. solar panels) and will be supported by new tools through
the Nationwide House Energy Rating Scheme (NatHERS).
Minimum energy efficiency standards for rental homes are being introduced to cut bills and
location-dot improve comfort for renters. A new heating minimum standard took effect in March 2021, with
standards for ceiling insulation and draught proofing proposed for future consideration.
25
Information for households to electrify and improve energy efficiency
Public education, targeting households in winter, will explain the practicalities and benefits of
location-dot reducing or switching away from gas. Using reverse cycle air conditioning to heat homes, for
example, can free up significant gas demand – including at peak time – and can save households
on bills.
Through the Residential Efficiency Scorecard program, homes can receive an energy star rating
location-dot and advice on how to save money on energy bills. Assessments and information are tailored
specifically for each individual home and are delivered by government-approved assessors.
The disclosure of the energy performance of homes provides householders with actionable
location-dot information about ways to improve the energy efficiency of their home. A draft national
disclosure framework was released in 2022. The document outlines the settings for state and
territory governments to implement disclosure schemes. Over 2022, a national cost-benefit
analysis on options for the disclosure – including mandatory disclosure – will be prepared, which
will help inform future disclosure policy in Victoria.
Household energy bill savings and Box 1

outcomes of electrification
There are immediate benefits to consumers that Illustrative energy bill savings,
switch to efficient electric appliances, through lower switching from gas to electric
energy bills (see Box 1).
hot water and space heating
A more major switch – to an all-electric home –
significantly reduces household energy bills.3 This is,
Upgrading hot water systems and space
in part, because avoiding a gas connection charge
heating offer major savings:
itself is a significant saving; connection charges vary,
but are generally between $250 and $300 per year. • Replacing an old electric storage water
Modelling analysis finds that a household living in heater with a heat pump can save around
an existing, typical detached house that moves $500 per year, and replacing an old gas
from using gas for heating, hot water and cooking to storage or instant water heater with a heat
using efficient electric appliances could reduce its pump can save between $100 and $200
average annual energy bill by around $1,020 per year. per year.
If that household has rooftop solar, the same switch • Should the home have solar panels installed,
could achieve savings of around $1,250 per year the bill savings increase significantly, with
(in addition to the approximately $950 per year solar power supplying most of the heat
average savings a typical household could expect pump’s electricity usage.
from installing a 6.6kW solar PV system alone). • Replacing an old gas room heater with an
individual split system reverse cycle air
conditioner can save $150 to $200 per year
on bills. If a multi-split reverse cycle air
conditioning system replaces an old gas
ducted whole-of-house heating system,
it can save in the order of $500 to $600
per year.
3 The modelled potential household energy bills savings do not include the upfront costs of replacing appliances. The modelling assumes end-of-life
appliance replacement, but different homes will be in different situations regarding the need for, and costs of, appliance upgrades.

figure 3 Residential energy bills, detached dwelling, 2022
$3,500
$3,000
$560
$2,500
$1,020
$2,000
$1,500
$1,250
$1,000
$500
$0
All gas All electric All electric All gas All electric
DUCTED AC SPLIT SYSTEMS SPLIT SYSTEMS
Electric
Gas Non-solar Solar
Figure 3 compares combined electricity and gas information to Victorians about the benefits for
bills4 for a typical, existing detached home with reducing – or switching from – gas use.
different appliance choices. These savings assume Households that take advantage of the
that the home does not take steps to improve its Government’s incentive programs are likely to
energy (building) efficiency, which could further achieve significant bill savings but, crucially,
increase savings. households that do not, are expected to be able to
Not all energy users will want or be able to switch to continue to use gas without significant bill increases.
electric appliances. Consumer survey results suggest For new homes, there are major benefits if they are
that – combined with complex or inadequate all-electric. They avoid the cost and disruption of
information – inertia, and preferences for selected switching from gas to electricity in the future, and all-
features of gas appliances, may prevent investment electric precincts can also avoid the cost of building
in electric appliances, even though they can be more new gas mains and reticulating gas infrastructure
efficient and have lower running costs. At present, around the building. Analysis suggests that standard
many are confused about the potential savings and electricity connections are suitable for new homes to
options, and are missing the opportunities presented be all-electric. New all-electric homes can also save
through electrification. Government support on costs upfront since they will have one heating
through the Solar Homes and Victorian Energy and cooling system, instead of two separate ones
Upgrades programs will help to overcome these (i.e. gas heating, electric cooling). The Government’s
barriers, and help consumers realise the benefits of regulatory changes will help ensure many more
going all-electric. The Government will also provide all-electric homes are available for Victorians that
want them.
4 Government modelling, rounded to the nearest $10.
27
Box 2
Accessing affordable energy during the transition
Victoria’s nation-leading energy consumer protection framework, retail market reform and
information help ensure Victorian households and businesses have access to affordable energy:
To ease cost of living pressure and help Victorians get a better deal on their energy bills, the
2022‑23 Victorian Budget invested $250 million so all Victorian households can apply for the new
$250 Power Saving Bonus. All households are eligible for this payment, if they use the Government’s
Victorian Energy Compare website – the only free independent energy comparison website with all
generally available gas, electricity and solar offers in Victoria.
The Victorian Government’s Energy Fairness Plan further strengthens access to affordable
gas supply, by banning retailers from using high-pressure sales tactics like door to-door sales
and unsolicited telemarketing, and strengthening the investigation and enforcement powers of
Victoria’s independent energy regulator, the Essential Services Commission.
Requirements for energy retailers mean that clear advice will be provided to Victorians, enabling
real comparisons between energy offers and informed decisions about their gas supply. Retailers
must proactively provide information to consumers facing payment difficulty about available
support, and tailored options to help manage their bills. The payment difficulty framework sets
minimum standards of payment assistance so that disconnection of supply for non-payment of a
bill is a measure of last resort.
The Energy Info Hub web platform provides comprehensive information for community
organisations to help consumers find an appropriate energy offer.
Box 3
Impact of electrification on non-energy emissions
It is also important that electrification is supported by good management of refrigerant gases

used in appliances such as reverse cycle air conditioners and heat pump water heaters. These
gases commonly have a much greater effect than carbon dioxide on global warming – sometimes
several thousand times greater per unit of mass. At the same time, using these technologies to
decarbonise gas does result in a significant net reduction in emissions.
Modern refrigerant gases have much less global warming impact than those found in older appliances.
This means that the lowest impact refrigerants must be used in any future transition involving
electrification, and maintenance and end-of-appliance-life management must also be considered.
The Victorian Government recognises this issue must be managed effectively to ensure that
electrification reduces emissions as much as possible. Our 2020 Industrial process and product
use sector emissions reduction pledge sets out plans for Victoria to improve the management of
refrigeration and air conditioning (RAC) equipment and refrigerant gases at a state level, while
advocating for further national action to reduce emissions from RAC equipment and accelerate the
transition to lower-emissions alternatives. For example, the Victorian Government’s Home Heating
and Cooling Upgrades program only funds the installation of heat pumps using low global warming
potential (R32) refrigerants.5
The Government is also working with Victorian industry to provide targeted guidance on how to
reduce leakages of refrigerant gases in industrial settings.
5 Less than 700 times the global warming impact of the same mass of carbon dioxide.

Historically, gas provided a lower-emissions energy water heaters, complement this cleaner grid, and
source than electricity, primarily due to Victoria’s mean that adopting efficient electric appliances now
heavy reliance on brown coal generation. This reduces emissions (Box 4).
is changing rapidly as wind and solar play an The Solar Homes and Victorian Energy Upgrades
increasing role in Victoria’s electricity mix, and as old programs take advantage of these trends to push
brown coal power stations retire. Victoria’s emissions down, contributing to the state’s
The high efficiency of many electric appliances, such interim and long-term emissions reduction targets.
as reverse cycle air conditioners and heat pump
Box 4
Electrification reduces emissions
The Roadmap scenario modelling finds that electrification – switching from gas to electric
appliances – will reduce emissions in the near term. This is possible despite the high emissions-
intensity of Victoria’s brown coal generators because only a small portion of the additional demand
from electrification is provided by brown coal. Rather, the incremental demand is more typically
met by increased output from coal generators in other states, gas generators, or by additional low-
emissions generation that would have been wasted without the additional electricity demand.
The scenario modelling analysed a sensitivity where there was no additional policy-led investment
in low-emissions generation in Victoria. Even under this assumption, the mix of generation that
supplies additional demand still produces less emissions than the gas use it displaces.
The scenario modelling reflects the Victorian Government’s long-standing commitment to
decarbonising the electricity system and assumes that additional demand from electrification
will be broadly matched by investment in new Victorian renewable generation. This reduces the
incremental emissions from electricity to almost zero and significantly increases the emissions
saving from electrification (Figure 4, right-hand column).
figure 4 Victorian combined gas and electricity emissions 2030

40
35
30
Emissions (Mt CO2-e)
25
20
15
10
0
No Action scenario Rapid Transition scenario Rapid Transition scenario
(no new renewable policy (additional renewable policy
in Victoria) in Victoria)
No Action Electrification Electrification Gas

electricity emissions (Victoria) emissions (Victoria) emissions (imported from NEM) emissions
source Roadmap scenario modelling
29
Increased electrification can have impacts on This effect is delayed because Victoria’s electricity
non-energy emissions (Box 3) and on the electricity grid has significant ‘headroom’ in winter – winter
grid, but these can be managed. The Roadmap’s peak demand is consistently two gigawatts less
scenario modelling confirms that electricity demand, than summer peak demand. This investment task
including demand at peak times (in winter), would will require timely action from key players across the
increase because of electrification, but also shows energy sector, especially alongside the likely growth
that this investment in the grid is worthwhile. in demand from electric vehicles.
The full costs of generation and network investment This includes close monitoring and timely action
were included within each scenario and compared by the Australian Energy Market Operator (AEMO)
at a total system cost level, and the modelling still and other market agencies to address emerging
selects electrification as a critical and economically challenges, government action on key market
efficient path to lower emissions. reforms, and timely investment from network
Electrification of gas load will require significant companies and generation investors.
investment in electricity infrastructure, but we have The growth in demand and required investment is
time to prepare and plan for this. Electrification, likely to occur over many years, but early planning is
alongside increasing adoption of electric vehicles necessary to ensure that this can be delivered in time.
and ongoing population growth, will start to The Victorian Government will work with electricity
noticeably impact peak electricity demand as we distribution businesses to understand the potential
approach 2030 (see Figure 5). investment required, well ahead of their next revenue
determination period (starting in mid‑2026).
figure 5 Projected growth in peak demand rapid transition scenario

18GW
16GW
14GW
Peak electricty demand
12GW
10GW
8GW
6GW
4GW
2GW
0GW
2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Underlying peak demand Growth in peak demand due to electrification Historic network peak demand (approx 10 GW)
source Roadmap scenario modelling

ȉ What we heard
Electrification and energy efficiency
A number of stakeholders emphasised the important role energy efficiency and electrification
can play to manage energy use and greenhouse gas emissions
“ Victoria has the highest national level of gas reticulation and residential gas use but this
presents an opportunity to capture low-cost energy efficiency and electrification opportunities
and take bold, innovative action to embrace the opportunities.
AGL
“ The key benefits of energy efficiency for the end users include reducing the need for gas (and
electricity). The co-benefit of energy efficiency is that it lowers operating costs, reduces load
on the grid, improves occupant comfort and enhances the resilience of the buildings to extreme
weather events, as well as improving safety …
PROPERTY COUNCIL OF AUSTRALIA
“ AIRAH believes the best approach is to focus on measures and technologies that are achievable
and available now. Many excellent opportunities already exist to slash emissions, improve
affordability and safety, and enhance the wellbeing and health of occupants. … electrical
appliances such as heat pumps for air conditioning and water heating are already available and
more energy efficient than their gas equivalents.
AUSTRALIAN INSTITUTE OF REFRIGERATION, AIR CONDITIONING AND HEATING
“ Electrification of many activities will be more efficient and will result in lower emissions. As the
electricity grid moves to higher renewables penetration, electric appliances get increasingly de-
carbonised as a result. As more roof-top solar PV gets installed, further de-carbonisation results.
LIGHTER FOOTPRINTS
“ For households, there are a range of existing electrical appliances available that can heat and
cool the home, be used for cooking and hot water heating that are far more efficient than their
gas equivalents. The electricity network also has the potential to become 100% renewable in
future years.
CONSUMER ACTION LAW CENTRE
31
Helping Victorian businesses cut energy bills
New and continuing Victorian Government programs that help businesses reduce their energy
bills and emissions include:
The Solar for Business Program, launched in May 2021, will support up to 15,000 Victorian
location-dot businesses to install solar PV systems at their work premises, empowering businesses to
generate their own electricity and minimise their bills.
The VEU program provides businesses with upfront incentives to reduce their gas use by
location-dot installing new equipment such as efficient water heaters, space heaters and commercial and
industrial gas boilers; a new commercial and industrial heat pump hot water activity was
introduced in February 2022. Businesses can also earn credits for bespoke ‘project based’ energy
efficiency, electrification and fuel switching activities that cut emissions. These projects have the
potential to achieve significant reductions in gas consumption for businesses; work is underway
to streamline activity requirements and to further encourage renewable energy investment
through these projects.
The VEU program will soon drive more change in large energy users. It will incorporate a new
location-dot exemption framework that will allow certain large energy users to opt-out of the scheme if they
adopt accredited energy management practices. This will manage costs for these businesses,
while helping them reduce energy use and emissions.
Victorian manufacturers will also benefit from nearly $20 million provided in the 2022‑23
location-dot Victorian Budget, including to invest in renewable energy and low‑carbon component
manufacturing, and to help their workers transition into highly skilled, digital jobs.

Stronger energy efficiency standards for new and refurbished commercial buildings will be
location-dot developed for the 2025 edition of the National Construction Code. The Victorian Government will
engage with industry on this and prepare them to meet new standards.
Sustainability Victoria’s Small Business Energy Saver Program (run until June 2022) provided
location-dot $5 million in discounts to small businesses upgrading to more energy-efficient equipment,
including hot water systems and efficient reverse cycle air conditioners.
$60 million over 5 years will support Victorian farmers to improve on-farm energy efficiency and
location-dot incorporate renewable energy into farming systems to make Victoria’s agriculture industries
resilient and internationally competitive.
In addition, the $31 million Business Recovery Energy Efficiency Fund, allocated 110 grants across
location-dot more than 25 industries in 2021, with these projects now helping businesses improve their energy
efficiency and reduce energy costs through investment in capital works and energy demand
management technologies.
Gas is used in a broad range of Victorian businesses, Roadmap scenario modelling shows that whilst
from heating commercial buildings to powering electrification is key to decarbonising the
industrial processes in the manufacturing sector. commercial and industrial sectors, as well as
Some of these businesses will be able to switch households, it also shows that for many users,
from gas to electricity to reduce their emissions particularly those with high temperature process
and manage their energy costs. The commercial energy needs, alternative types of gas are a lower
sector primarily uses gas for space heating, water cost decarbonisation option – this is discussed
heating and cooking, and so will often be able to further in the next section, Unlocking alternative
switch these activities to efficient and widely- gases and establishing a hydrogen industry. Lower
available electric technologies similar to those used temperature requirements are often well suited to
in households. The use of gas in the industrial sector electrification, in particular because high efficiency
is more diverse, ranging from low temperature electric technologies can often meet these needs. For
water heating requirements and low and medium example, heat pumps are an electric technology that
temperature steam raising across sectors such as can heat water or lower-temperature steam using
food and beverages and pulp and paper, to very high three to four times less energy than a gas boiler. Such
temperature needs in sectors such as metals, glass high efficiency electric technologies may offer many
and ceramics. businesses both emissions and energy bill savings.
33
Due to the diverse sizes, processes and energy Small businesses can access government support
needs of the commercial and industrial sectors, it to electrify, improve efficiency and reduce energy
is difficult to generalise about the potential savings bills now. The VEU program provides businesses with
from electrification or energy efficiency upgrades. As upfront incentives to upgrade water heaters, space
part of the Roadmap development, the Government heaters and commercial and industrial gas boilers –
surveyed a broad range of industrial gas users and as well as many others. In 2020-21, more than 14,900
found that many businesses are uncertain about businesses received upgrades through the program.
potential savings and options for decarbonisation, Thousands of small and medium businesses are
and seek support for further investment. The also currently benefiting from additional discounts
Government will help a broad range of businesses, provided through the Small Business Energy
and particularly Small to Medium Enterprises, Saver Program. The Solar for Business Program is
achieve significant energy bill savings with a range of also available for those wishing to install solar PV
existing programs. systems at their work premises. The Government
The same survey indicated that Victorian continues to monitor the affordability of gas supply
industrial gas users have a strong interest in and will consider further measures as required
decarbonising, with energy efficiency their preferred to ensure Victorian small businesses can access
decarbonisation action. Capital costs was still affordable gas.
cited as a barrier; respondents noted that funding The Victorian Government will also build on its
support, incentives and consistent energy policy past investments in energy efficiency by driving
are crucial for increasing uptake of decarbonisation improved performance of commercial buildings,
options. Industry also called for help to better through improved standards for new and
understand costs, commercial and technical viability refurbished commercial buildings under the National
of existing alternatives to gas (e.g. for heat). Construction Code from 2025. This will complement
policy efforts to improve the efficiency of residential
buildings. It will drive innovation and reduce energy
use, in particular gas for space heating – delivering
major bill benefits for many business tenants.

ȉ What we heard
Electrification and energy efficiency
Several stakeholders identified significant potential for commercial and industrial businesses
to electrify and become more energy efficient.
“ Over the last two years A2EP [the Australian Alliance for Energy Productivity] has completed
more than 20 studies assessing renewable alternatives to fossil fuelled process heating… we
estimate that 35% or 20PJ of [Victorian] industrial natural gas heating demand can be reduced
with energy efficiency measures or displaced economically with electrification.
AUSTRALIAN ALLIANCE FOR ENERGY PRODUCTIVITY
“ Improved efficiency is possible on virtually all [industrial] sites, and some sites can entirely
eliminate gas use by adopting heat-pump water heaters for lower-temperature hot water.
Some sites that need higher-temperature hot water can use heat-pumps to pre-heat water to
a moderate temperature, and use gas-fired systems to take the water to the temperature that
is required. While this will not fully decarbonise the natural gas use, it can significantly reduce
gas emissions.
ENERGY EFFICIENCY COUNCIL
“ Through Green Star [a building efficiency rating tool] we are introducing requirements for new
and existing buildings to be fully powered by renewables and be fossil fuel free … while the rating
tool acknowledges there may be a role for green gas or other renewable gaseous fuels in the
future for specific uses, for most typical buildings the best, simplest, and cheapest solution will
be electrification.
GREEN BUILDING COUNCIL OF AUSTRALIA
35
Unlocking alternative gases and
establishing a hydrogen industry
Alternative gases, such as hydrogen and biomethane, are likely to play a significant
and growing role in Victoria’s energy future and will be critical to meeting our
2050 net zero emissions reduction target. This includes attracting new industries
to Victoria, such as hydrogen exports and the production of renewable products
such as fertiliser or metals and providing a flexible fuel for electricity generation to
complement wind and solar. These gases also provide an important energy option
for existing Victorian gas users.
The Victorian Government has set out its vision for Another important role for gaseous fuels is to provide
renewable hydrogen6 in the Renewable Hydrogen a flexible fuel for electricity generation. Gas currently
Industry Development Plan – and the steps it will take plays a ‘firming’ or ‘peaking’ role, turning on quickly
to get there. Government actions will build industry to maintain reliability of supply during periods of
capacity, create long‑term jobs through new career high demand or drops in supply from other sources.
pathways, drive innovation and reduce greenhouse The modelling suggests that, under some scenarios,
gas emissions. gas-fired generation may continue to play a small
Modelling for the Roadmap confirms that hydrogen role into the 2040s to complement growing renewable
and biomethane play an important longer-term generation, which may be replaced with hydrogen-
role in the gas transition to net zero emissions. powered generation. Hydrogen and renewable gases
Across a range of modelled scenarios, hydrogen and can also play an important role in decarbonising
biomethane use grows through the 2030s and 2040s, the transport sector, which is a major focus of the
particularly for industrial users. Government’s hydrogen funding. Both hydrogen and
biomethane are currently higher cost energy options,
and the technologies are not widely used in Australia.
6 Renewable hydrogen is hydrogen produced from entirely renewable energy, through a process called electrolysis (where hydrogen is separated
from water). It produces no emissions during its production as well as when combusted, making it a zero emissions fuel source. Blue and grey
hydrogen are not renewable as they are produced from fossil fuels (usually gas and, sometimes, coal). Blue hydrogen involves carbon capture and
storage of resultant emissions, whereas grey hydrogen does not.

Victoria is leading the way in building the foundations for a thriving hydrogen economy, as
outlined in the Renewable Hydrogen Industry Development Plan, and preparing for the supply
and take up of renewable gases at scale:
$10 million for the Hume Hydrogen Highway program, a renewable hydrogen highway transport
location-dot backbone, including at least four refuelling stations and around 25 new hydrogen-powered
long-haul heavy freight vehicles, along Victoria’s busiest freight corridor – the Hume Highway
between Melbourne and Sydney.
Support for the education sector to build the required skills and develop the practices and
location-dot products to grow the Victorian hydrogen sector through the Victorian Higher Education State
Investment Fund which has included:
• $10 million for Swinburne University of Technology’s Victorian Hydrogen Hub
• $9 million to support Deakin University’s Hycel Technology Hub
• $4.7 million for the University of Melbourne’s Zero Emissions Energy Lab
• $12 million to support Swinburne University of Technology’s Aerostructures Innovation
Research Hub
Support for the establishment of four regional Victorian Hydrogen Technology Clusters and the
location-dot launch of the Victorian Hydrogen Technology Cluster Network.
$6.6 million in grant support for projects that will see Victoria produce and use renewable
location-dot hydrogen in real-world applications through the Renewable Hydrogen Commercialisation
Pathways Fund.
$600,000 in grants to support eight recipients to develop businesses cases or feasibility cases
location-dot to support their transition to renewable hydrogen through the Renewable Hydrogen Business
Ready Fund.
Working with the project proponents, Australian Gas Infrastructure Group and ENGIE, on the
location-dot proposed Hydrogen Park HyP Murray Valley, backed by funding from the Australian Renewable
Energy Agency.
Robust analysis of cost recovery options to drive the uptake of renewable gas will be undertaken,
location-dot including a renewable gas certificate scheme, which could provide long-term, off-budget
investment in hydrogen and biomethane.
It is important that Victoria continues to develop Biomethane is compatible with existing appliances
the industries and the capabilities needed to scale and infrastructure, but is not likely to be available
up production of renewable gases and hydrogen, in large enough quantities to meet all renewable
to meet both domestic and export demand gas needs. Switching to hydrogen will generally
in the longer-term. Victoria has extensive gas require significant modifications to, or replacement
infrastructure, and it may make sense to continue of, existing gas-using appliances – particularly
to use this infrastructure, but replace fossil gas with for industrial appliances – and the Victorian
substitute fuels. The Australian Hydrogen Centre Government’s 2021 survey of industrial gas users
is looking at the technical feasibility for hydrogen indicates both the technical challenges and upfront
blending and conversion in Victoria’s gas distribution costs of switching are seen as potential barriers to
networks, which could commence with regional taking up hydrogen. The Victorian Government has
towns ahead of a broader transition. provided assistance to gas consumers to move to
Many existing gas users are seeking guidance renewable hydrogen through grants offered under the
and support to transition smoothly to new Renewable Hydrogen Business Ready Fund, and will
alternative fuels. continue to build capacity through its partnerships
and supply chain activities.
37
If hydrogen is to be taken up at scale, increased and energy market participants. We will report back
investment – and effective markets, regulation and in 2023 on the development of these proposals.
cost recovery frameworks – are essential. As alternatives to fossil gas are taken up at increasing
The Victorian Government will consider establishing scale, including blending in the network, effective
a renewable gas scheme, and renewable gas targets, market frameworks will be needed for cost recovery.
to help drive investment in gas substitution and Exploring these options – including a nationally
guide transition planning for businesses, consumers consistent approach – will be a priority for Victoria.
Hydrogen Energy Supply Chain and CarbonNet projects
The Hydrogen Energy Supply Chain (HESC) The HESC Project is delivered by a consortium
project is demonstrating the conversion of of top energy and infrastructure companies
Latrobe Valley coal and biomass to hydrogen from Australia and Japan – including Kawasaki
for export to Japan. In January 2022, the Heavy Industries, J-Power, Iwatani Corporation,
world’s first liquefied hydrogen carrier departed Marubeni Corporation, Sumitomo Corporation,
Victoria to transport hydrogen to Japan. For and AGL – with the support of the Japanese,
the project to progress to full commercial scale, Commonwealth and Victorian governments.
it must achieve successful carbon capture and Over the next two years, the HESC project
storage (CCS), as part of the CarbonNet project. partners will undertake extensive research and
Victoria’s CarbonNet project is developing a CCS development to determine the technical and
network in Gippsland through field investigations at operational requirements for a commercial-
the project’s Pelican site in Bass Strait, off the South scale project. A commercial-scale project could
East coast of Australia. CarbonNet stands apart enable Victoria to continue use of some fossil gas
internationally for its potential to capture emissions and produce hydrogen while meeting climate
from multiple sites. This network of sites brings change emissions targets. Projects such as
together multiple carbon dioxide capture projects, these are important to advance technologies
including HESC, and transports the carbon that can deliver gas substitutes and help us
dioxide through a shared pipeline for injection in lower emissions.
deep underground offshore storage sites.
ȉ What we heard
Hydrogen and biomethane
A number of stakeholders emphasised the important role hydrogen and biomethane can play
to decarbonise gas use, particularly for high-temperature industrial processes:
“ The [Australian Energy Council] sees great potential for hydrogen to replace natural gas for
[industrial process heat and feedstock]. The emissions from industrial processes requiring feedstock
gas and intense heat represent some of the most challenging emissions to eliminate. Depending on
the process, either electricity or hydrogen may be the most cost-effective solution to replace gas.
AUSTRALIAN ENERGY COUNCIL
“ It is important to distinguish between the energy sources required by industry, and the ability
for companies to adopt alternatives. Large scale, high heat applications cannot be readily
electrified and will likely continue to need to be met by the capability of gaseous energy.
CHEMISTRY AUSTRALIA
“ Approximately half of Victoria’s large commercial and industrial gas use is unlikely to be able to
be electrified, meaning that hydrogen or biogas would need to be used to replace natural gas.
The cost of replacing commercial and industrial gas equipment with electrical equivalents also
needs to be considered against the use of hydrogen or biogas.
AUSTRALIAN ENERGY MARKET OPERATOR

ȉ What we heard
“ Because natural gas remains such an important and valued part of the energy mix, renewable
gases like hydrogen and biogas represent a significant opportunity for Victoria to achieve its
targets, while making use of Victoria’s extensive gas network and minimising costs.
AUSTRALIAN GAS INFRASTRUCTURE GROUP
Gas users emphasised that switching fuels would be financially and technically challenging,
particularly hydrogen due to its different characteristics to fossil gas. However, gas networks
and appliance manufacturers expressed confidence that these challenges could be
overcome. Organisations from across the supply chain had deep interest in the development
of alternative gases and many are already investing.
“ Industrial gas users are also facing stranded asset risk where they have significant capital
invested in plant and equipment that is reliant on gas. Even if hydrogen were to emerge as a
viable fuel switching opportunity, existing plant and equipment may not be compatible, leaving
the customer with a choice of either significant re-investment or plant closure.
ENERGY USERS ASSOCIATION OF AUSTRALIA
“ If natural gas was to be replaced by renewable hydrogen, both gas networks and customers
would need to make investments to replace their assets to be compatible with hydrogen.
These additional costs may add upward pressure on sustainable gas prices, making them less
attractive than other energy sources.
AUSTRALIAN ENERGY REGULATOR
“ There are technical challenges for gas appliances [to accommodate more sustainable gaseous
fuels], but from preliminary research and development undertaken by manufacturers there is a
high level of certainty these challenges can be overcome. Rather, the current challenge is a lack
of certainty that there will be commercially sustainable market for such appliances.
GAS APPLIANCE MANUFACTURERS ASSOCIATION OF AUSTRALIA
“ Large manufacturing and industrial processes will need financial and technical support to
change processes and upgrade equipment for a gas specification different from today’s natural
gas specification. An advantage of injecting biomethane into the Victorian gas network over
hydrogen is that it will not change the gas specification.
BRICKWORKS
“ Biomethane is uniquely placed to utilise existing gas infrastructure, making it an affordable and
quickly deployable opportunity to decarbonise Victoria’s gas network.
BIOENERGY AUSTRALIA
“ As we deepen our knowledge of hydrogen supply chains and technology limits, we hope to be
able to increase the amount of green hydrogen we can take. We have made the commitment to
invest in green hydrogen as a responsible asset owner with no current alternative to the use of
high-heat content gaseous fuel.
ENERGYAUSTRALIA
39
Maintaining gas reliability
throughout the transition
The Victorian Government recognises that millions of businesses and households will continue
to use gas during the transition. A package of robust mechanisms will support ongoing gas
reliability and help to manage any risk of a potential gas supply shortfall, in close collaboration
with market and regulatory bodies, and to assist Victoria’s manufacturing industry to secure
reliable and affordable gas, including in managing contracts. Actions include:
location-dot Supporting measures to enhance use of gas storage.
Working with gas infrastructure proponents to ensure timely investment to support secure and
location-dot reliable supply while avoiding overbuild and minimising the risk of stranded assets.
Policy and regulatory reform to support reliability that considers supply (e.g. storage) and
location-dot demand side options which could be triggered by the market operator in the event an
acceptable standard of reliability is not met.
Ensuring any reliability reform provides an appropriate balance between reliability and
location-dot affordability to ensure customers pay no more than is necessary.
Improve regulatory coverage of emerging gas production assets such as distribution connected
location-dot hydrogen or biomethane facilities.
Coordinate research, policy work and feasibility studies to ensure all pathways to take up
location-dot alternative gas remain open (for example, the potential for hydrogen to be used by industrials or
as an input fuel for gas‑powered generation).

Actions in this Roadmap that reduce gas use through The Victorian Government is working to support
energy efficiency, electrification and substitute these necessary investments, while balancing the
gases will improve gas supply reliability and will potential effects this investment could have on
increase the supply available for industry and other affordability. This balance recognises:
hard-to-transition customers. Even if international • An increasing tendency for gas retailers to engage
pressures ease, forecasts from AEMO and the in shorter-term contracts with gas suppliers, and
Australian Competition and Consumer Commission some retailers and gas users who are relying on
(ACCC) show that the supply of gas from traditional the spot market and are therefore facing greater
gas fields such as those off the Gippsland coast is volatility in wholesale gas prices.
likely to deplete rapidly over the next decade, and
• A growing hesitancy within industry to invest in
likely faster than fossil gas demand will decline.7
new gas infrastructure due to policy uncertainty
These trends create pressures for Victorian gas
and concerns about potentially ‘stranded’ assets
consumers, in terms of both the reliability and
(i.e. where a potentially shortened asset lifespan
affordability of gas.
may result in a failure to recoup the return on the
New sources of gas supply and new infrastructure initial investment).
may be needed to maintain the reliability of • A decline in the gas customer base over the longer-
gas supply. Potential investments include new term carrying the risk that the costs of maintaining
conventional gas supplies, expanded pipeline ageing gas infrastructure could fall on a smaller
capacity to allow gas to flow from interstate, new group of customers and on those who are the most
storage facilities or the establishment of LNG import vulnerable and least able to transition, raising
terminals. Strong and effective gas export controls equity concerns.
are also needed to reserve gas for domestic use and
Through actions in this Roadmap, the Government
to ensure Australians pay a fair price for Australian
will pursue all appropriate action to help mitigate the
gas. The Government continues to advocate to the
risk of gas shortfalls or supply disruptions during the
Commonwealth and national bodies to ensure that
transition. The Victorian Government has supported
the needs of the domestic gas market, including
the planning and new investment in necessary
Victorian consumers, are prioritised, particularly
projects to support reliable and secure gas supply,
in a time of heightened geopolitical tensions and
and driven rule changes to support gas storage
increasingly volatile international energy markets.
(Box 5).
7 AEMO Victorian Gas Planning Report March 2022 aemo.com.au/energy-systems/gas/gas-forecasting-and-planning/victorian-gas-planning-

report; ACCC Gas Inquiry 2017-2025: Interim Report January 2022, accc.gov.au/publications/serial-publications/gas-inquiry-2017-2025/gas-
inquiry-january-2022-interim-report.
41
Box 5
Victoria’s gas reliability and supply actions
The Victorian Government has supported a range of necessary projects to support reliable and
secure gas supply. This has been balanced to ensure consumer affordability and avoid overbuild,
with the associated risk and costs of asset stranding as we move to net zero emissions. In 2022, the
Victorian Government has actively ensured the following critical infrastructure projects:
• In March 2022, granting the pipeline licence for APA Group’s Western Outer Ring Main project. This
project will improve the reliability of Victoria’s gas transmission system and will allow more gas to
flow into storage at the Iona Underground Storage facility in the west of the state.
• Also in March, Esso Australia confirmed it would invest $400 million to deliver an additional 200 PJ
of gas over five years, with about 30 PJ to come online in 2023.
• In April 2022, the Victorian Government provided written support for the APA Southwest Pipeline
expansion project, which subsequently passed through Final Investment Decision.
During the Energy Ministers’ Meeting of June 2022, a commitment was made to actively progress
rule changes to support gas storage. Victoria is working with AEMO and the Commonwealth to
rapidly progress this. In the immediate term, this means ensuring that APA Group’s Dandenong LNG
storage facility, which plays a critical role for system security and reliability, is used effectively and
in the most cost-effective manner. In the medium term, the Victorian Government looks forward to
working with the Commonwealth Government on further storage projects to enhance Victorian gas
supply security, including Lochard Energy’s Heytesbury Underground Gas Storage project.
The Victorian Government continues to work to ensure the security and reliability needs of all
Victorians are met, and that Victoria can continue to play its part in supporting Australian gas users
more broadly. Further new supply proposals, which will be subject to relevant statutory consultation
and regulatory approvals, include:
• The Golden Beach Project: development of the Golden Beach gas field in the Gippsland Basin,
with a forecast supply of 43 PJ over two years and potential to transition the facility into a
storage facility.
• Viva Energy’s proposal for a Geelong Energy Hub, including an LNG import terminal.
• Vopak’s proposal for an import facility in Port Phillip Bay.
Longer term, hydrogen offers enormous potential To move to 100 per cent hydrogen usage will
as a clean and reliable alternative to fossil gas, require either significant appliance modifications
transport fuels and industrial feedstocks. Integration or complete replacements. If such a switch is
of alternative gases, such as hydrogen, will need undertaken, it should minimise the amount of time
to be managed with minimal disruption to end consumers are without gas and must consider timing
users. Transitioning to alternative gases will not and equity implications for industry involved. The
be straightforward for all gas users. For example, United Kingdom, which is planning to convert almost
most existing gas appliances may not work reliably four million customers over seven years from 2028,
beyond a blend of about ten per cent hydrogen may offer some lessons. 8
by volume (equivalent to about three per cent
by energy).
8 H21 North of England report, Northern Gas Networks, Equinor, Cadent. h21.green/projects/h21-north-of-england/

ȉ What we heard
Reliability
Many stakeholders emphasised the importance of both energy reliability and affordability,
and the need to strike a balance between those two objectives.
“ MEU members are vitally interested in four key aspects – the cost of the energy supplies, the
reliability of delivery for those supplies, the quality of the delivered supplies and the long-term
security for the continuation of those supplies.
MAJOR ENERGY USERS
“ As a large user of natural gas across our Australian manufacturing footprint, BlueScope places
great importance on both the cost of natural gas and the reliability of supply. … Natural gas
prices are already high for industrial users and substitution options have the potential to apply
additional price pressure.
BLUESCOPE
“ New gas infrastructure investments and ongoing asset maintenance are necessary to ensure the
reliability and safety of gas supply in the short term. However, this adds to the regulatory asset
bases of gas network businesses, the cost of which will be recovered across a declining base of
customers, pushing gas prices up for those customers.
AUSTRALIAN ENERGY REGULATOR
“ As Victoria transitions to a lower emissions future, striking a balance between the investment
required to prevent shortfalls and avoiding long-term stranded assets will be critical.
AUSTRALIAN ENERGY MARKET OPERATOR
“ Moyne Shire hosts [businesses] that depend on a reliable, substantial and cost-effective supply
of natural gas for their operations. … Failure to ensure that a cost competitive and reliable
alternative was available would critically impact the financial feasibility of these industries and
risk loss of local employment.
MOYNE SHIRE COUNCIL
43
Preparing the future workforce
Build skills and capability to realise the
opportunities from the gas sector transition
The gas sector transition presents both opportunities and challenges for Victoria’s workforce.
The Victorian Government is committed to helping connect, retrain and upskill workers to take
advantage of emerging opportunities through:
Retraining and reskilling trades and workers in transition
Solar Victoria is supporting the upskilling of gas plumbers and electricians in heating, ventilation
location-dot and cooling, energy efficiency and renewable gas technologies, and providing training for
plumbers to install energy efficient hot water systems including heat pumps. This is to be
delivered in collaboration with industry experts and training providers such as the Plumbing
Industry Climate Action Centre. This will ensure that Victoria has sufficient industry capability
to install reverse cycle air conditioners for low income and vulnerable households through the
Home Heating and Cooling Upgrades program.
Working closely with the Commonwealth and other state governments, the Victorian Government
location-dot will develop nationally consistent training materials for producing, transporting and using
hydrogen. In addition, the Renewable Hydrogen Business Ready Fund will help businesses build
their knowledge and skills for future broader adoption of hydrogen as a replacement for fossil gas.

Registered and licensed gasfitters will undertake ongoing learning to ensure they maintain
location-dot competence and develop new skills, especially as new technologies emerge, as part of the
Government’s development of a Continuing Professional Development framework for building
and plumbing practitioners.
Building capability of a clean economy workforce
The Victorian Government has invested $10 million to develop the skills needed in a clean
location-dot economy which includes a focus on the renewable energy sector and supporting existing workers
in transitional industries to reskill and upskill.
The Clean Economy Workforce Skills Initiative is being led by the Department of Education
location-dot and Training in collaboration with other government departments and agencies such as the
Victorian Skills Authority, Sustainability Victoria, Solar Victoria, the Department of Environment,
Land, Water and Planning, the Department of Jobs, Precincts and Regions, and the Department
of Transport.
Building on related programs and initiatives across government, this initiative comprises the:
location-dot • Clean Economy Skills and Jobs Taskforce which is a strategic advisory body of experts
providing independent advice to government
• Development of a Clean Economy Workforce Development Strategy so that government

investment in skills and training to address workforce skill needs as the economy decarbonises,
is efficient and targeted
• Provision of grants under a Clean Economy Workforce Capacity Building Fund to support
vocational education and training workforce capability, curriculum design, learning resources
and collaborative learning platforms.
These actions build on existing work underway in Victoria, such as:

location-dot • The Victorian Skills Authority will deliver its first annual Victorian Skills Plan in 2022, which will
identify training needs for local communities and industries across the state.
• Providing targeted training through the 7 Star Homes Program to help the residential building
sector increase their skills in designing and constructing 7-star homes.
• Victoria’s Residential Tenancies Regulations 2021 introduced mandatory gas safety checks
to improve the safety of gas appliances in rental properties, increasing demand for gasfitters
across the state. An amendment to the Gas Safety (Gas Installation) Regulations 2018
mandating Australian Standard 4575 for Type A gas appliance servicing came into effect on
1 June 2022.
45
The gas industry employs many Victorians, We recognise that a decarbonised gas sector will be
including in the extraction and production of more advantageous for some professions, skills sets
gas, and around 20,000 registered and licensed and trades, while demand for others will change over
gasfitters. Thousands of Victorian workers supply time. At the same time, we must maintain a capable
and manufacture gas appliances and equipment or workforce to service traditional gas appliances and
maintain the safety of the gas system. Government infrastructure to support the ongoing reliability
is committed to a fair and effective transition that and safety of energy supply for homes and
captures the opportunities of the transition to businesses connected to gas, and to decommission
upskill and future-proof our workforce, particularly infrastructure as required. Balancing the need to
people who manufacture, install and maintain gas ready the gas workforce to transition, while ensuring
equipment today, to ensure they are ready for the safety of gas infrastructure is at the fore of workforce
energy jobs of the future. policy development.
The decarbonisation of gas, particularly the growth The Victorian Government is taking strong action
of hydrogen and expansion of electrification, will to build capability for a clean economy workforce
create new jobs and opportunities. Government is and provide support and opportunities for workers
investing heavily to build new and emerging skills, in transition. Beyond these commitments and
capabilities and supply chains, including retrofitting investments, Government will continue to engage
buildings, making, installing and maintaining with affected industries and regions to help navigate
appliances and equipment, building new energy potential changes for Victorian workers – and to
infrastructure, and producing renewable gases effectively involve them in delivering these new
and hydrogen. Roadmap actions.

ȉ What we heard
Submissions noted that a key aspect of the transition was the need to plan for future
workforce needs and to ensure that workers along the gas supply chain were not left behind
during the transition.
“ Fair and effective workforce transitions are a necessary precondition to achieving a

decarbonised future. Without the skilled workforce to build, operate and maintain the new
energy infrastructure then nothing else is possible. This means income support, retraining, job
creation, economic diversification, direct public investment in new technologies and job creation.
UNITED WORKERS UNION
“ Investment is required in improving the skills of the professionals who will install and maintain
these [heating, ventilation, air-conditioning and refrigeration] systems. And end-users will ideally
be better educated in the importance of correct installation and maintenance.
AUSTRALIAN INSTITUTE OF REFRIGERATION, AIR CONDITIONING AND HEATING
“ The large number of jobs in the gas industry necessitates a transition that is planned over the
long term and well-resourced by government. Workers should have certainty that the transition
will lead to decent, well-paid jobs, otherwise they are likely to, understandably, oppose it.
BROTHERHOOD OF ST LAURENCE
“ The [Victorian Plumbing and Fire Protection Industry] strongly supports the comments in the
Consultation Paper regarding the opportunity presented by hydrogen to utilise the extensive
skills of Victoria’s 20,000 licensed or registered gasfitters. … It is vitally important the Australian
economy has the skills to take advantage of the hydrogen opportunity. The unavailability of
the required skilled workforce could translate into a failure to take advantage of the hydrogen
opportunity more broadly, at significant cost to the economy and community more broadly
through the higher cost of the transition, climate change risks from a slowing of the transition,
energy security related risks, and the risks of higher energy costs for consumers and businesses.
VICTORIAN PLUMBING AND FIRE PROTECTION INDUSTRY
“ The transition presents enormous opportunities to expand the clean energy industry,
generate jobs, boost economic productivity, and position Victoria as a leader in clean energy
technologies.
VICTORIAN GREENHOUSE ALLIANCES
47
Reducing fugitive emissions
Reductions in gas fugitive emissions will be supported through such actions as:
Advocating to ensure Commonwealth mechanisms such as the National Greenhouse and Energy
location-dot Reporting scheme and the Emissions Reduction Fund can better support further reductions from
the sector in fugitive emissions.
Assisting industry to utilise best practice and knowledge sharing to help manage and reduce
location-dot fugitive emissions.
Actions already undertaken to replace ageing mains in the distribution networks are contributing to
a reduction from fugitive emissions – with the added benefit of making those parts of the network
compatible with the future use of alternative gases. Industry is also being proactive. For example, the
winner of the Australian Pipeline and Gas Association’s inaugural 2021 Innovation Award went to a
technology aimed at improving the identification and measurement of fugitive emissions.
Fugitive emissions represent about three per cent As gas use progressively declines, fugitive emissions
of Victoria’s total greenhouse gas emissions with from the sector will also naturally fall, including as
around 55 per cent of these arising from leaks, parts of the network are replaced.
venting and flaring of gases in the extraction,
production, processing, storage, and transportation
of fossil gas.

49
Transitioning Government’s own gas use
The Victorian Government has committed to reduce its greenhouse gas emissions
by around 70 per cent from 2018-19 levels in the 2021-25 Whole of Government
emissions reduction pledge, including by using 100 per cent renewable electricity
by 2025. Reducing emissions from fossil gas will become an increasingly important
feature of the Victorian Government’s transition to net zero emissions.
The Victorian Government is responsible for The Government is demonstrating leadership as

approximately three per cent of Victoria’s total an early adopter of electrification and alternatives
gas consumption with major users including to fossil gas, including by requiring all State
schools, hospitals and correctional facilities, Government infrastructure business cases, for
alongside widespread use in office-buildings and buildings and facilities, to include options for
other settings. all-electric developments. This will ensure that
alternatives to gas are always considered in our new
builds and major upgrades.

In addition to a new requirement for businesses cases, for buildings and facilities, to consider
all-electric options, policies are already in place to reduce reliance on fossil gas in Victorian
Government buildings and infrastructure, including:
Public hospitals and health services
The Victorian Health Building Authority Guidelines for sustainability in health care capital works
location-dot support the transition to all-electric public healthcare buildings when building new hospitals.
This supports the decarbonisation of the public healthcare system when government operations
move to 100 per cent renewable electricity from 2025.
In May, the Government announced funding for the new Melton Hospital, designed to be
location-dot Victoria’s first all-electric hospital powered by 100 per cent renewable electricity. The hospital’s
design will focus on sustainability initiatives such as maximising on-site solar generation, high-
performing façades, efficient plant and equipment, and integration of green spaces within the
hospital precinct.
ARTISTS IMPRESSION, MELTON HOSPITAL
51
The Victorian Health Building Authority is also supporting the replacement of gas infrastructure
location-dot in existing healthcare buildings through its asset renewal grant programs. Recent
examples include:
• Replacing central gas boilers at a large metropolitan hospital with a hybrid electric heating
hot water and modular condensing gas boiler system to significantly reduce gas use, improve
reliability to the existing heating system, and installing solar panels to reduce carbon emissions
to offset the increased electricity use.
• Installing electric hot water systems and induction cooktops at two community health
centres to eliminate the use of liquefied petroleum gas and installing solar panels to offset the
increased electricity use.
Schools
The Victorian School Building Authority sets out in its Building Quality Standards Handbook
location-dot the intention to phase-out fossil gas to school sites in the future as a key consideration when
determining the appropriate heating for schools.
Social housing
The Energy Efficiency in Social Housing Program, which will support a range of cost-effective
location-dot energy efficiency upgrades for 35,000 public, community and Aboriginal housing properties
includes a strong emphasis on electrification, including installation of reverse cycle air
conditioning to replace inefficient gas and electric heaters. This is part of the Government’s
Big Housing Build program, with all-electric specification wherever possible.

53
3
Next steps
55
This Roadmap is the start of a journey to a net zero emissions future for the
gas sector. It sends a clear signal to the community and industry about the
need to transition the gas sector, with actions setting out priorities for this
considered transition.
• It gives Victorians more choice when it comes to the future of our energy supply
• It will save Victorians money on their gas bills
• It will reduce greenhouse gas emissions and help us tackle climate change
These actions are designed to give every Victorian The Gas Substitution Roadmap is part of a much
the confidence that their energy is reliable – now and wider policy development, planning and investment
into the future. process, to support Victoria’s clean energy
As the Government delivers the actions of this transition. Government will continue to consult
Roadmap, we will engage with industry and with industry and the community on this. Areas for
Victorians to progress these actions and ensure further exploration as part of this ongoing policy
milestones are met, including a public Roadmap development process include:
update report in 2023 as well as next round of • Accelerating the uptake of efficient electric
pledges to meet the 2030 and 2035 emissions appliances, including for households where such
reduction targets. changes maximise benefits of installed solar PV
The Government will continue to work with industry • Exploring options to recover costs of renewable
to drive decarbonisation in the gas sector as we gases, taken up at scale, and consider establishing
develop our state-wide emissions reduction targets renewable gas targets
for 2035. The Government will consider options for • Monitoring energy market and technology
further action to promote a smooth and orderly trends to increase confidence in costs of gas
transition to net zero emissions, including new substitutes, production capacity limits and
actions to increase energy efficiency, electrification consumer preferences
and uptake of renewable gases and hydrogen. • Examining findings on the potential for hydrogen to
displace fossil gas, including studies to be released
by the Australian Hydrogen Centre
• Tracking and managing the effects of further
electrification on the energy market and
investment in generation, transmission,
distribution and storage

Appendix
57
The Roadmap multi-sector scenario modelling
The multi-sector modelling developed for the This approach allows the broad economics of
Roadmap integrates industry-leading gas and different gas substitution technology options under
electricity market models to examine the cost and different cost, availability and uptake assumptions
feasibility of different technologies – such as energy to be understood.
efficiency, electrification and alternative gases – To do this, the modelling considers a ‘No Action’
to decarbonise Victoria’s gas sector. The integration scenario with no policy effort to reduce emissions,
of the electricity model is necessary to accurately and three core scenarios where the Victorian gas
estimate the cost, peak demand and emissions sector was assumed to achieve net zero emissions
impacts from converting gas use to electricity. While by 2050 (Figure 6). Each scenario adopts different
the modelling includes existing commitments such as assumptions about future technology costs,
the Victorian Renewable Energy Target, the Victorian availability and consumer uptake. This approach is
Energy Upgrades program and the Solar Victoria used to examine whether the key scenario outcomes
programs, it does not include any assumptions about are sensitive to key assumptions about the future,
new policy interventions that might be implemented and therefore how confident we can be about the
by the Government in the future. need for particular policy actions today. Scenario
outcomes are not trying to “predict” the future, but
provide strategic insights to guide policy making.
figure 6 Roadmap scenario modelling scenario design
Rapid Electrified Zero Carbon

No Action Transition Future Fuels Future
Scenario Scenario Scenario Scenario
Applied emissions No emissions Net zero emissions by 2050
constraints constraint for the
Below 2ºC carbon budget
gas sector
Technology, costs, Moderate assumptions on Assumptions Assumptions
availability and technology costs and availability favour electric favour hydrogen
consumer uptake technologies technologies
Purpose Demonstrate Demonstrate Test pathway sensitivity to assumptions

magnitude of a plausible
the task combination of
pathways
The model estimates cost and emissions outcomes This means users (and their appliances) move away
of different appliance and fuel choices. When from fossil gas appliances to electric, hydrogen or
appliances (in all sectors) reach their end of life, they biomethane options over time, and also improve their
can either be replaced with an equivalent appliance energy efficiency.
using the same fuel, or with an appliance that The scenarios model estimates the following for each
serves the same need but uses a different fuel. The scenario over the period 2021-2050:
model makes this choice based on the lowest cost
option, including the upstream gas and electricity • Demand for, and supply of, fossil gas, electricity,
supply chain costs required to deliver the energy. biomethane and hydrogen
The emissions constraints in the core scenarios also • The total cost of appliances, energy network
impact that choice by requiring the total emissions upgrades and energy supply for gas-using sectors
from the gas sector (and any new emissions incurred • Greenhouse gas emissions
within the electricity sector) to fall in line with the • Retail energy prices for consumers
applied emission constraints (e.g. the 2050 target). • The effects of electrification on electricity
grid peak demand and new electricity
generation required

Multiple technologies are needed to achieve net zero
emissions in Victoria’s gas sector
All scenarios clearly demonstrated that to efficiently • Alternative gases play an important role,
reduce gas sector emissions, a combination of particularly for industrial users. Biomethane is
technologies is needed over time – even when blended into the gas network up to the amount
the scenario was designed to prioritise a selected assumed to be available, and the remaining gas
technology. This indicates that using a mix of supply is switched to hydrogen during the 2040s.
technologies will better meet the energy needs of This finding applies even in the Electrified Future
Victoria’s diverse gas users than a single technology scenario, which assumes that electric appliances
on its own. Despite varying assumptions being used will have higher efficiency and lower cost than
across the three core modelled scenarios, all three under a Rapid Transition scenario.
found that: • Gas-fired power generation plays a small role in
• Electrification and energy efficiency play an supporting renewable electricity sources, along
important role in reducing emissions before with other dispatchable ‘firming’ technologies
alternative gases, such as hydrogen and such as batteries, although this may be replaced
biomethane, become widely available. Early action with hydrogen power generation at some point in
to promote these technologies is critical to achieve the future.
Victoria’s interim emissions reduction targets. These trends can be seen in the three charts below,
This finding applies even in the Zero Carbon Fuels depicting the three core scenarios.
Future scenario, which assumes very low long-term
hydrogen prices.
A Rapid Transition scenario (Figure 7) shows significant electrification during the 2020s and 2030s,
with a switch over of pipeline connected gas users to hydrogen in 2045.
figure 7 Energy consumption rapid transition scenario

250PJ
200PJ
Energy consumption
150PJ
100PJ
50PJ
0PJ
2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Natural gas Hydrogen Biomethane Electricity Energy efficiency GPG/HPG
source Roadmap scenario modelling GPG Gas powered generation HPG Hydrogen powered generation
59
Despite using assumptions that are more favourable to electrification, the Electrified Future scenario
(Figure 8) is very similar, with the hydrogen switchover delayed by just one year.
figure 8 Energy consumption electrified future scenario

250PJ
200PJ
Energy consumption
150PJ
100PJ
50PJ
0PJ
2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
The Zero Carbon Fuels Future scenario (Figure 9) uses assumptions that are more favourable to zero carbon
gases, but still finds that electrification plays the key role in the 2020s. The Zero Carbon Fuels Future scenario
sees an earlier switch to hydrogen – in 2040 – and greater volumes of hydrogen, but still relies on a mix of
energy sources.
figure 9 Energy consumption zero carbon fuels future scenario

250PJ
200PJ
Energy consumption
150PJ
100PJ
50PJ
0PJ
2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
A combination of pathways serves the needs of different energy users and helps each of them to transition
to clean energy sources. For example, increased electrification and energy efficiency in residential and
commercial buildings reduces gas demand and frees up gas supply for industrial users that are less able
to electrify. This also gives more time to increase the supply and reduce the cost of alternative gases, which
underpins the long-term transition of many industrial users.

ȉ What we heard
Technology pathway combinations
A broad range of stakeholders identified that a combination of technologies is likely to be

needed to meet the diverse needs of Victoria’s gas users:
“ There is no silver bullet policy response that can address decarbonisation across the gas
sector per se – bespoke approaches are required for each subsector.
BUSINESS COUNCIL OF AUSTRALIA
“ The three options [to decarbonise gas] are electrification of the end use of gas, replacement of
natural gas with biomethane, and replacement of natural gas with hydrogen. The options are
presented as standalone in the consultation paper but as we progress towards decarbonisation,
all of these options will have some role.
ENERGY NETWORKS AUSTRALIA
“ Each pathway outlined in the consultation paper has some merit, however it is unclear how any
single pathway could allow a transition to a net zero gas market by 2050.
ORIGIN ENERGY
“ In the long term, the [Clean Energy Council] expects that electrification will ultimately present
the most efficient energy outcome for residential and business customers, and that renewable
hydrogen and biomethane will be most productively focused on addressing hard-to-abate
energy needs such as high temperature process heat (as well as heavy transport)
CLEAN ENERGY COUNCIL
“ A broad-based policy objective to achieve net zero that follows an objective rather than a
prescriptive pathway will encourage participants and customers to respond flexibly with
technology and at lowest cost
AUSTRALIAN PETROLEUM PRODUCTION AND EXPLORATION ASSOCIATION
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is also available on the internet
at www.delwp.vic.gov.au
ISBN 978-1-76077-900-9 (pdf/online/MS word)
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Water and Planning 2022
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Gas

Protecting Victorians against high gas prices 4

Enabling choice and removing barriers to electrification 7

Gas Substitution Roadmap at a glance 8

Public consultation activities supporting the Roadmap 17

Fossil gas today 20

Helping Victorian businesses cut energy bills 32

Unlocking alternative gases and establishing a hydrogen industry 36

Maintaining gas reliability throughout the transition 40

Preparing the future workforce 44

Reducing fugitive emissions 48

Transitioning Government’s own gas use 50

The Roadmap multi-sector scenario modelling 58

The Hon. Lily D’Ambrosio MP

Clean energy produced by household solar panels combined with modern,

The key changes described in this Roadmap include:

2 GAS SUBSTITUTION ROADMAP

4 Gas Substitution Roadmap

6 Gas Substitution Roadmap

Incentives Policy and regulatory change

Victorian Energy Upgrades Victoria Planning Provisions to be changed

Plumbing Regulations will be aligned with

Priorities for policy and reform, and opportunities for Victoria

Remove regulatory barriers in 2022

All electric, efficient homes

Promote consumer choice, help households

Continue to assist industry to

Unlock renewable gases

Build on the growing number of innovative hydrogen

Maintain gas reliability

New investments from 2023,

10 Gas Substitution Roadmap

figure 1 Roadmap program logic

Challenges Actions Outcomes

Gas is becoming Drive energy efficiency Reduce energy bills

Build skills and Support clean

solar-system and extensive stakeholder engagement.

Modelling has demonstrated that electrification reduces emissions and reduces

plug-circle-check household energy bills – effective immediately.

meter-fire to secure it on more affordable terms.

12 Gas Substitution Roadmap

user-helmet-safety and far‑reaching over coming years. An equitable transition is essential.

Gas is an important energy source for many

16 Gas Substitution Roadmap

user-helmet-safety Stakeholder forums

book Public Consultation Paper

oven Household consumer survey

industry-windows Targeted industrial gas user survey

comment Responses to the Gas Substitution Roadmap Consultation Paper

 Responses to questions 208

Individual consumer 150 Industry 12

list-timeline comments clipboard-check

Maintaining Potential challenge of inconsistent Energy efficiency and

Maintaining electricity Electricity system security was a Improve energy efficiency,

Managing uncertainty The transition will require Roadmap identifies priorities,

Transitioning the Opportunity to expand existing Incentives for efficient electric

18 Gas Substitution Roadmap

20 Gas Substitution Roadmap

Victorian Government actions

Rebates and incentives to support efficient, electric homes

Responses to questions 208