IEEFA submission backs residential electrification before Australian senate inquiry

The Institute for Energy Economics and Financial Analysis has submitted evidence to Australia's Senate Standing Committee on Economics for its inquiry into residential electrification, highlighting that gas-consuming households face greater exposure to energy price inflation than all-electric homes. The submission also warns that industry campaigns promoting renewable gas pose risks to consumers by counteracting electrification efforts.

IEEFA's submission addresses the financial vulnerability of households that remain dependent on gas for heating, cooking and hot water. As Australia's gas market has tightened and prices risen, all-electric households have been insulated from gas price volatility, benefiting from the declining cost of renewable electricity and the increasing efficiency of electric appliances and heat pumps. The submission identifies the upfront cost of switching from gas appliances to electric alternatives as a key barrier to residential electrification, particularly for lower-income households who would benefit most from reduced energy bills over time.

Industry campaigns promoting so-called renewable gas — including hydrogen and biomethane blended into existing gas networks — are identified as a risk factor that diverts consumer and policy attention from the more cost-effective pathway of direct electrification. IEEFA's submission argues that these campaigns can mislead consumers about the timeline and economics of gas network decarbonisation, creating lock-in of gas infrastructure and appliances that will ultimately become stranded assets as the transition progresses. The submission calls for regulatory clarity to distinguish between genuine renewable energy pathways and marketing claims that extend fossil gas dependency.

The inquiry provides an opportunity to establish national policy settings that accelerate household electrification through financial incentives, phased building standards and consumer protection measures. IEEFA's research indicates that all-electric homes equipped with rooftop solar and battery storage can significantly reduce household energy costs, particularly in regions with high solar resources. The submission recommends targeted support for renters and low-income households who cannot access upfront capital for electrification upgrades, ensuring the benefits of the energy transition are distributed equitably across Australian society.

Key figure — 3 — key barriers to residential electrification identified by IEEFA: price inflation exposure, misleading renewable gas campaigns, and upfront switching costs