Australia Reached Peak Gas Years Ago, but It Needs a Ban on New Home Connections, and Plans for a Faster Exit

Why It Matters

Accelerating the gas phase‑out is essential to avoid higher energy bills, meet Australia’s climate commitments, and protect manufacturing that relies on affordable power.

Key Takeaways

• Australian household gas demand fell 16% since 2020 peak.
• Grattan urges ban on new residential gas connections.
• Report calls for windfall profit tax on LNG exporters.
• Suggests shifting hydrogen subsidies to loans for early-stage projects.
• Recommends LPG for rural users to avoid cross‑subsidy.

Pulse Analysis

Australia’s gas story has reached a turning point. After a 16% drop in household consumption since the 2020 peak, the sector now accounts for roughly one‑fifth of the nation’s carbon emissions when extraction and processing are included. This reality clashes with the federal Future Gas Strategy, which assumes continued high‑volume gas use beyond 2050. Analysts argue that relying on large‑scale carbon capture, renewable gases, and costly carbon removal is unrealistic, making a faster decline in gas use a prerequisite for meeting the 2050 net‑zero pledge.

The Grattan Institute’s report lays out a pragmatic policy roadmap. A ban on new residential gas connections, paired with subsidies for landlords to replace gas appliances with electric ones, would accelerate household electrification. For regional and rural households lacking grid access, the study suggests nudging consumers toward liquid petroleum gas (LPG) to avoid cross‑subsidies that burden low‑income users. It also proposes repurposing generous hydrogen tax incentives into smaller grants and loans, reflecting the fledgling state of the renewable‑fuel market and the limited demand for green hydrogen at present.

Industry implications are profound. Introducing a windfall profit tax on LNG exporters and tightening the domestic reservation scheme aim to capture more value from Australia’s lucrative export market while ensuring sufficient gas‑fired generation for the grid during the transition. Without decisive action, manufacturers could face rising electricity costs, and the country risks missing both climate targets and the economic benefits of a well‑managed energy shift. The report’s recommendations provide a clear blueprint for policymakers to balance environmental goals with energy security and economic stability.