Energy crisis is looming and we need a plan, now

Despite repeated requests for clarity, the business community remains in the dark about how Victoria will navigate this critical transition.

The Victorian Chamber has been working with the gas industry, and other key business groups, on a unified approach to promote action on this critical issue.

The lack of a coherent plan is not just frustrating—it’s dangerous.

We urgently need to understand how the Victorian Government’s position on gas will align with the Federal Government’s Future Gas Strategy which states that gas is fundamental to our future energy mix.

Businesses and households are already grappling with the fallout of rising costs and economic uncertainty. And business is concerned about their future in Victoria.

Yet, instead of presenting a measured, achievable strategy, the Government appears committed to phasing out gas for what seems to be ideological reasons, regardless of the economic and social costs.

The rhetoric about “Victoria’s gas substitution policy” is not a transition plan and does not give Victorians the confidence they deserve. Simply turning off access to gas doesn’t solve the issue. Such an approach lacks resilience, ignores economic realities and risks leaving Victorians worse off.

We were pleased to see the Premier’s announcement to exclude gas cooktops from a proposed ban on gas appliances in homes and businesses. However, that too seems at odds with the Energy Minister’s direction.

Victoria’s business community is the engine of our economy, driving growth, creating jobs and contributing to our state’s prosperity.

Yet these policies are placing an increasing burden on businesses, many of which are already grappling with skyrocketing energy costs.

Gas remains a critical component of our energy mix. It powers homes, fuels businesses and supports industries that form the backbone of our economy. Yet the Government seems intent on shutting off gas in a way that forces households and businesses into unaffordable transitions without offering viable alternatives.

After more than a decade of inaction, Victoria will need to buy gas from other states and possibly countries to meet demand.

Our supply is dwindling, and we must secure more. Such a situation has become an unnecessary gamble with our economic future.

As people leave the gas network for the electricity network, we need to ensure there is sufficient electricity supply for the increase in demand.

The grid is already under pressure, so it’s paramount the State release their plans on how that will be achieved. As a start, we know that offshore wind has been delayed, again, and the State is already paying companies to keep the coal generators operating.

Just this week, the NSW Government advised their residents to refrain from using electrical appliances like dishwashers because of the network load. It’s only week one of summer!

Transitioning to a net zero economy is an aspiration the Chamber supports. But it must be done in a way that ensures reliability, affordability and economic stability. Resilience means creating a system that can withstand shocks, whether economic or environmental.

It means supporting households and businesses through the transition, not forcing them to bear the brunt of ill-conceived policies.

Most importantly, it means having a clear, detailed and achievable roadmap—a plan that inspires confidence and provides a sense of direction.

It is an issue that stretches beyond Victorian borders and requires a concerted effort down the Eastern Seaboard to shore up transition resources like gas and underpinning existing power generation as renewables come online.

As homes and small businesses are removed from the gas network, the cost of gas for industrial customers would increase. But there is a question of how ready the electricity generation and grid are to reliably and affordably deliver more electricity. When energy becomes unreliable and unaffordable, businesses are forced to make tough decisions.

Do they cut staff? Scale back operations? Pass costs on to consumers? Do they leave Victoria? These are the stark choices facing Victorian businesses right now.

Energy, both gas and electricity were once a key advantage of Victoria. No State produced more affordable energy. As we sit now, the uncertainty of the energy landscape risks undermining investor confidence and will start to impact businesses investment in Victoria.

Victorians deserve a plan that works for everyone: a plan that reduces energy prices, secures a reliable supply and supports businesses and households through the transition.

The Chamber will continue to push for these outcomes, because getting this right is an economic necessity.

This article originally appeared in the Herald Sun on Thursday 5 December 2024.