Electricity is not cheaper and cleaner than gas. Here's why
29 June 2023
NOT all gases are the same. The ACT's ban on new natural gas connections does not apply to LPG, which makes perfect sense. The ACT Government's timeline for transitioning away from natural gas by 2045 is in perfect sync with the schedule for replacing all conventional LPG with renewable, zero-emitting LPG over the same timeframe.
That means people can go on using the gas they know, love and trust, while being net zero emitting. They can still have the immediacy, effectiveness and reliability of gas, without being subject to an increasingly overburdened electricity grid.
While most people know LPG fires-up their BBQs, many are surprised that 2 million Australian households (22% of all homes) rely on it for in-home cooking, hot water and/or heating.
We are very appreciative of the commonsense approach in the ACT Government that sees homes, as well as cafes, bars, restaurants and anyone else, able to engage a licensed fitter to install gas cylinders for their needs.
ACT Energy and Emissions Reduction Minister Shane Rattenbury has indicated that he is open to the opportunities renewable LPG presents. He deserves credit for that.
The Barr Government's confirmation that homeowners, businesses, schools and community groups in the new suburbs who prefer the immediacy, effectiveness and reliability of fossil-free gas heating, cooking and hot water can continue to do so using cylinders connected to the premises is a sensible response that ensures renewable LPG is part of the capital's clean energy future.
LPG is very much at the forefront of the clean energy revolution. From as early as 2025 bioLPG, sourced as a by-product of sustainable aviation fuel production, will be in the Australian market. It can replace 11% of current demand virtually overnight. That's a reduction of 56 million kilograms of CO2. But, over the course of the transition to 2045, renewable synthetic LPG, made from green hydrogen and removing CO2 from the atmosphere, will replace all conventional LPG.
It's a game-changer that negates the exorbitant costs of switching to electricity. If you have LPG you're perfectly positioned. Your existing appliances will be net zero over the same timeframe as electricity, without the expense and hassle of switching. If you don't have LPG connected, it's a live option in the ACT. Canberrans are already switching on to LPG. Since the ban on natural gas connections in new suburbs was flagged, LPG in-home installations have gone in at the rate of six per week. People like gas. And with it able to achieve zero emissions, there's even more reason to like it.
The huge benefit of bioLPG and rLPG is they are simple 'drop-in' replacements for conventional LPG. That means no extra capital costs to homeowners, businesses or anyone using it. Existing cylinders, pipes and appliances require no changes.
It's also a saving to taxpayers. We have made it clear to all governments that we are not seeking any funding to aid LPG's transition... no handouts, subsidies, project funding or the like. The industry will simply get on with the new technologies.
With the independent Australian Energy Market Operator belling the cat on looming power shortfalls and potential major blackouts, rLPG will be an important complement to delivering reliable, affordable energy, while relieving pressure on an increasingly overburdened electricity grid.
Residential case studies for NSW and Victorian LPG gas homes, over 830,000 dwellings in all, show the claims about electric appliances being better on costs and emissions are overcooked.
Looking at appliance costs and energy bills, continuing with LPG remains lower cost for homeowners to the 2040s, when LPG and electrical appliance-use cost the same.
Switching to the most efficient electrical appliances, households would incur $11,871 in upfront costs (appliance and installation), save a few hundred dollars over a year on bills, but would only reduce emissions by between 5.4kg (NSW) and 9kg (Victoria) per week. At best, that's the volume of typical BBQ cylinder.
In NSW it would take 14 years for homeowners to get a return on that investment. In Victoria it's 12 years. It makes for very expensive carbon abatement at eight-to-20 times higher than the going rate for Australian carbon credits.
Faced with these costs, families might opt for cheaper, though less efficient, electrical appliances thinking they're still doing the 'right thing'. But they'd be wrong.
Emissions from cheaper electrical appliances are actually higher than sticking with existing gas appliances – LPG or natural gas. In NSW the emissions increase in switching from gas to lower efficiency electrical appliances is 640kg per dwelling a year and in Victoria it's a whopping 960kg a year.
This dispels the myth that electricity is, by default, cheaper and lower emitting than gas. But it gets worse.
These costs are only for appliance replacement. What is often hidden from consumers are the additional costs as all-electric homes typically require upgrading from Phase 1 to Phase 3 wiring throughout. Depending on the size of the premises, these refit costs can run to $50,000 per dwelling.
LPG's clear, commercially viable and relatively easy transition to zero emissions is a boon for customers and a breakthrough that smart governments will seize upon.
Published in the Canberra Times on 29 June 2023.
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