Sunk costs: a framework for avoiding further spending on gas networks
Just over half of Australian households use gas. To meet Australia's commitments to reduce emissions and slow climate change homes must be shifted to cleaner alternatives – primarily renewable electricity. Despite the need to reduce gas use, 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.
This report develops a framework to assess proposals to shrink the gas network through electrification, called strategic decommissioning or network pruning. It provides context and describes gas network pruning with examples. 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.
The report presents a proposed framework which could be used by policymakers or interested community groups to assess proposals to avoid some gas network spending. It finds much of the information needed for this framework is not publicly available. The report proposes changes governments can make to avoid further spending on gas networks and a review to increase transparency and improve planning processes for gas.
