The Victorian Government has decided not to go ahead with its proposed ban on all new residential gas appliances, announcing an amended set of reforms – a move the gas industry has celebrated.
Launching its Gas Security Statement, the State Government announced a number of energy reforms, which it said are aimed at securing Victoria’s gas supply, encouraging electrification and driving down energy bills.
Under new regulations set to take effect from 1 March 2027, when a gas hot water system reaches the end of its life, it must be replaced with an efficient electric alternative like a heat pump. Gas hot water systems can still be repaired if they break, and they can also be temporarily removed and reinstalled during renovations.
From 1 January 2027, all new homes will be built all electric. Additionally, from 1 January 2027, all new commercial buildings (other than industrial, manufacturing and agricultural buildings) will also be required to be built all electric.
The Victorian Government said there are no changes to rules regarding end-of-life replacement for gas appliances in all existing commercial building, and the use of LPG for households or business is also unchanged.
This marks a shift from the proposed plan announced in December 2024, which would have seen the electrification of all new and existing residential buildings, excluding existing residential cooking appliances.
Industry has welcomed this readjusted position.
Steve Davies, the Australian Pipelines and Gas Association chief executive, said the government’s shift away from an outright appliance ban is a pragmatic move that better reflects the diversity of Victorian homes and the varying needs of households.
However, the associated said targeting hot water in isolation risks recreating the same problems in a narrower form.
“When you need to design a broad exemption regime just to make a ban workable, it’s worth asking whether that ban should exist at all,” Mr Davies said. “For many households, particularly those in older homes or regional communities, gas hot water is not just a preference, it’s the most practical and affordable option.”
Even after the ban commences on March 1 2027, homeowners can receive an exemption to install a new gas hot water system if an electric alternative cannot physically fit, if electric replacement costs are unreasonably high, if the home requires a switchboard upgrade or if the property is subject to a heritage overlay.
Davies said the recalibrated policy confirms that Victoria’s energy system is not yet ready for full electrification, and that this should be treated as a structural consideration, not a policy afterthought.
“We urge the government to go further, to remove unnecessary restrictions and instead focus on supporting choice, clarity and investment across the full suite of clean energy options.”
The Australian Gas Infrastructure Group acknowledged the State Government’s announcement on its revised policy, but warned that the decision to press ahead with a gas hot water ban for homes will be costly, disruptive and ineffective.
Craig de Laine, AGIG chief executive officer, said, “It’s not clear who benefits from this policy: it places a direct and upfront cost on households and removes choice.”
de Laine said the shift from the government’s draft position reflects a recognition that forced electrification is challenging for many Victorian households, businesses and industries – and there are other policy options to achieve net zero without the inequity and cost impacts that remain under the revised policy.
“We acknowledge the government’s willingness to listen and to refine its draft policy based on evidence and consultation, and encourage it to apply that same lens to the residential hot water and rental components of the policy.” Mr de Laine said.
The Australian Energy Producers also welcomed the Victorian Government’s partial backdown on the proposed ban, but called for more to be done to urgently address gas shortfalls facing the state.
Peter Kos, Australian Energy Producers Victorian Director, said Victoria’s gas industry is committed to bringing new supply to market, but needs evidence-based energy policy that recognises the long-term role of gas in Victoria’s energy mix to encourage investment in new gas exploration and development.
“Victoria has vast untapped gas reserves in Gippsland and the Otway Basin. The Government should work with industry to unlock this opportunity and ensure Victorians continue to have reliable and affordable energy.”
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