Gas usage in Australia has peaked and is now in structural decline across all sectors, according to a new report from the Grattan Institute. After more than half a century of growth, the thinktank warns that gas consumption must fall faster to meet climate targets, and calls on the government to implement policies that further reduce reliance on the fossil fuel.
Key Findings of the Report
The Grattan Institute's analysis reveals that residential gas use peaked in 2020, gas for electricity generation has declined by 11% since 2014, and manufacturing gas use has been falling since the early 2000s. Liquefied natural gas (LNG) exports likely peaked in 2022. The report states that these declines have largely not been driven by emissions-reduction policies, and current rates are insufficient to achieve net zero emissions.
Government Inaction and Political Backing
Despite the decline, federal and state politicians continue to publicly support gas. Prime Minister Anthony Albanese has announced plans to reserve more gas for domestic use and encourage exploration in Victoria and Tasmania. Opposition leader Angus Taylor has called for fast-tracking coal and gas projects. In South Australia, Premier Peter Malinauskas is pushing to lift a fracking moratorium, while the NSW government has opened new areas for gas exploration. The Grattan Institute criticises this lack of acknowledgment, warning that ignoring the decline will lead to a chaotic and costly transition.
Implications for Net Zero Targets
The report emphasises that reducing gas use is a multi-decade project that must start now. Without targeted policies, governments would be left with implausible options such as carbon capture and removal technologies, which are expensive and unproven at scale. Even with green hydrogen or biomethane, the costs and availability are significant challenges.
Gas as a Backup for Renewables
While gas is often cited as a crucial backup for renewable energy, the report shows that the amount needed for this role would likely be half of what was burned in the 2010s. Overall gas-related CO2 emissions are projected to drop from 90 million tonnes to 64 million tonnes by 2050, still too high for net zero. The Grattan Institute recommends phaseout dates for residential gas use and targeted policies across households, industry, and power generation.
Future of LNG Exports
LNG producers currently enjoy high profits, but the report warns they face a future as high-cost producers in a shrinking market as global demand for fossil fuels slows. Treasury modelling from last year indicated that the value of coal and gas exports could halve within five years.
Alison Reeve, director of the institute's Energy and Climate Change program, stated: "Gas is now in structural decline across Australia. There's only one way to go from a peak, and that's down." She added that ignoring the decline "will result in a chaotic and inequitable process with higher costs for all."
