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Gas import rejection raises the stakes on Victoria's Gas Strategy

"The Victorian Government's decision to reject a Liquefied Natural Gas import terminal at Crib Point raises serious questions about how the needs of Victoria's gas users will be met in the years ahead," said Innes Willox, Chief Executive of national employer association Ai Group today.

"The latest gas market projections, released only yesterday, show a substantial risk that demand outstrips supply from around mid-decade. That risk has already been pushed back by the LNG import terminal to go ahead in NSW at Port Kembla, and by demand-side efficiency steps. But much more action and investment will be needed to keep closing that gap. Existing gas supplies in Victoria are declining fast, and new supply – increasingly from Queensland coal seam gas – is expensive. Meanwhile gas plays vital roles in running industry, heating homes and stabilising our electricity system.

"The Victorian Government is developing a long-term gas transition strategy. That work just became even more urgent, and the questions involved are hard.

"Where will we get our gas from, for as long as we need it? Unlocking development of Victorian onshore conventional gas last year was sensible, but the resources in the ground look far too small to make much difference.

"Will gas services be better provided in future by electricity – with all the investment to reinforce power networks that entails – or by clean gases like hydrogen, which are currently very costly or scale-limited?

"And with gas looking pricey and replacements taking major investment, how can we maintain affordability and competitiveness for households and industry?

"Having just rejected one source of supply, there is an even heavier onus on the Victorian Government to develop plausible pathways in its gas strategy.

"Government and stakeholders – especially the groups that fought so hard to stop the Crib Point development – also need to grapple with the scale of projects that will be needed for a successful transition to net zero emissions. We are going to need new transmission lines, new renewable energy zones, new port facilities for hydrogen or other energy intensive exports, new industrial sites for clean materials. Indeed there are proposals for some of these in the vicinity of Crib Point. The challenge for our planning systems is to resolve legitimate concerns while meeting strategic needs. The scale of development needed across Victoria and the rest of Australia is bound to upset someone, and it is much easier to stop projects than to make them happen.

"The question for the Victorian Government – and all governments – is are they ready to do the big things?" Mr Willox said.

Media enquiries: Tony Melville – 0419 190 347