IEEFA Urges Victoria to Prioritise Lowest-Cost Renewable Gas Pathways

The Institute for Energy Economics and Financial Analysis has submitted recommendations to the Victorian Government on its Renewable Gas Consultation Paper, calling for policies that deliver the lowest-cost energy outcomes for consumers. IEEFA warns that hydrogen and biomethane policies must account for the distinct technical and economic characteristics of each technology rather than adopting a one-size-fits-all approach.

IEEFA Research Analyst Jay Gordon submitted formal comments on Victoria's Renewable Gas Consultation Paper, outlining the institute's concerns about current policy directions. IEEFA recently published an analysis titled 'Renewable gas campaigns leave Victorian gas distribution networks and consumers at risk', which forms the basis of the submission. The submission argues that no single renewable gas technology is suitable for all end uses and that cost implications for energy users must remain central to any policy design.

Victoria faces mounting pressure to reduce fossil gas dependency as Bass Strait reserves deplete and gas supply shortfalls loom by the late 2020s. Renewable gas — including hydrogen and biomethane — has emerged as a potential pathway, but IEEFA cautions against blanket adoption without rigorous cost-benefit analysis. The submission is relevant to India as well, where policymakers are similarly evaluating green hydrogen and biogas as complements to renewable electricity in hard-to-abate sectors.

IEEFA calls on the Victorian Government to ensure that any hydrogen or biomethane policy is targeted, evidence-based, and prioritises consumer interests over network business models. The institute has offered to discuss its submission further with the Department of Energy, Environment and Climate Action. The consultation outcome will shape Victoria's gas transition strategy and could serve as a reference for other jurisdictions developing renewable gas frameworks.

Key figure — 63% — Victoria's share of Australia's total household gas consumption