Sunk costs: a framework for avoiding further spending on gas networks

Can some gas network spending be avoided and diverted to assist households, especially those facing disadvantage, to move away from fossil gas by electrifying their homes?

At a glance

Just over half of Australian households use gas. To meet our commitments to reduce emissions and slow climate change we will need to shift homes to cleaner alternatives – primarily renewable electricity.

Moving from gas to all-electric homes offers big benefits. This is especially true for households facing disadvantage, who can lower their energy bills substantially. However, it also presents significant challenges, which necessitate new policy and regulatory efforts.

Despite the need to stop using gas within 25 years, Australia’s gas consumers (mostly households) are spending hundreds of millions of dollars each year on maintaining, operating and, in most jurisdictions, expanding gas networks. Gas infrastructure installed today could last 80 years.

Dive deeper

This report develops a framework to assess proposals to shrink the gas network through electrification, called strategic decommissioning or network pruning.

This report provides context and describes gas network pruning with examples. It then presents BSL’s proposed framework, which could be used by policymakers or interested community groups to assess proposals to avoid some gas network spending. Next, this report examines how much of the information needed for this framework is publicly available, and finds that much of the information is not public and access to the information is poor. The report concludes by proposing changes governments can make to avoid further spending on gas networks, and a review to increase transparency and improve planning processes for gas.

Our recommendations:

• Governments should develop and operationalise a process to avoid further gas network spending where it can be avoided through electrification, in line with our implementation considerations described below.
• Governments should undertake a review of the availability of gas network information with a view to increasing transparency. Gas network data that should be made publicly available, unless there is a compelling reason not to, includes:
  • maps of gas distribution networks
  • local area gas network demand
  • local area gas network disconnection numbers and dormant accounts
  • the costs, locations and dates planned for infrastructure works, and any possible non-network alternatives (e.g. electrification).
• State/territory governments should:
  • ban new home gas connections as soon as possible where this has not already occurred
  • investigate banning new commercial connections where viable
  • phase out the sale of new gas appliances to existing homes.