Read in this article
Most bets focus on electrification of entire homes rather than gas Gas distribution companies hedge potential losses from asset depreciation Promotion of renewable gas exposes consumers to high future costs Customers can enter into disputes to recover costs from companies
There has been much talk recently about renewable gas as an alternative to fossil gas in many countries that have recently adopted its production, such as Australia, which has been accelerating towards the transition to clean energy for years.
Despite the intensive promotion campaigns for this type of clean gas in the Australian state of Victoria, it faces accusations of misleading and defrauding consumers due to the novelty of this gas and the uncertainty of its future, especially in light of the accelerating trend of comprehensive electrification of buildings, according to an analytical report issued by the Institute of Energy Economics and Financial Analysis (JEFA).
Natural gas distribution networks in the state of Victoria – southeastern Australia – are promoting the possibility of transporting renewable gas to resident customers as one of the viable future options, within the framework of energy transition plans.
The report – seen by the Energy Research Unit – showed that the financial plans of network operators contradict the promotional messages they broadcast to pay for renewable gas, which may expose consumers to the risks of paying high costs in crooked ways, which no one has declared to them.
Network operator spending is suspicious
Gas distribution networks in Victoria, Australia, claim that their infrastructure can be repurposed for transporting renewable gas derived from biomethane (produced from biological materials) or hydrogen, but this requires large investments to reconfigure it to transport new gas of relatively different specifications from fossil gas.
An analysis of the financial plans for the gas networks indicates that they have allocated 19 million Australian dollars (12.2 million US dollars) only to spend on preparing the infrastructure for hydrogen or renewable gas, in addition to 6 million Australian dollars (3.8 million US dollars) proposed for promotional campaigns, of which consumers will bear 25%. At least, according to the report.
( 1 Australian dollar = 0.64 USD)
Gas transmission networks in Australia. Photo courtesy of the IEEFA Energy Institute
At the same time, the grids have asked to recover A$461 million ($297 million) in the accelerated depreciation costs of their assets over the next 5 years, a hedge to recover costs before large numbers of customers likely to switch from the gas grid to electrify their homes are completely disconnected. .
Poor spending on preparing networks to receive renewable gas indicates that companies are practicing a kind of future misinformation of consumers, which may expose them to legal scandals and questions of reputation and integrity, if they fail to live up to the promises they are currently promoting to customers, according to Institute for Energy Economics analyst and co-author of the report Jay Godon .
The future is for electricity, not gas
Campaigns for renewable gas in Australia run counter to distributors themselves acknowledging that the electrification pathway is the greatest possibility in the residential sector within long-term carbon neutrality plans, according to network data sent to the Australian Energy Regulatory Agency (AER).
It also contradicts the decision of the Victorian state government to ban the delivery of gas to new homes starting in 2024, as part of the state’s emissions reduction plans, according to a report – seen by the Energy Research Unit – in early August 2023.
Most of the analyzes circulating on the potential uses of renewable gas and hydrogen focus on the industrial sectors. As for its use in homes, it still faces logistical constraints and high technical challenges, according to ongoing scientific debates, which are periodically monitored by the Energy Research Unit.
Renewable energy experts recommend that homes completely switch to electricity, as it is less expensive and more efficient, in addition to avoiding the health concerns associated with the use of gas in homes, while not neglecting the electrical risks -also -.
Despite the high stakes on electrification of all sectors in Australia, but especially the domestic sector, gas distribution companies are still promoting renewable gas just as they are calculating their losses from the energy transition and the consequent depreciation of their assets, i.e. they become useless or useless -.
The dangers of investigating misleading behavior
Renewable gas campaigns can mislead consumers and incur huge losses if they continue to buy gas appliances, believing in their future viability in the event of a transition from natural gas to renewable gas.
Analysis experts at the Institute of Energy Economics and Financial Analysis question the suitability of current household natural gas appliances for use with hydrogen or renewable gas, which means that they may be exposed to early depreciation risks before the end of their life span.
The risks that consumers may be exposed to increase in the event that gas distribution companies fail to fulfill promises to supply them with renewable gas in the future, which may make companies subject to legal risks that challenge their reputation, in addition to the risks of investigation with them for practicing misleading behaviors that are prohibited by the Australian Consumer and Competition Commission “ACCC”.
Oil and gas expert Kevin Morrison – photo via journal-topics
Distribution companies in the state of Victoria may also be exposed to the risk of litigation with consumers demanding reimbursement of the costs of purchasing gas appliances or delaying the conversion of electricity to their homes, depending on reassuring promises from companies about the future.
That’s why Kevin Morrison, an oil and gas analyst at the Institute for Energy Economics, advises investors to take these risks into account before allocating capital into such ambiguous, risky projects.
Morrison also calls on governments and regulators in Australia to protect consumers from overly optimistic advertising campaigns about the long-term future of existing natural gas networks, a controversial topic that has yet to be scientifically resolved.
related topics..
Also read..
Subscribe to the newsletter to receive the most important energy news.
2023-08-23 17:11:10
#Renewable #gas #campaigns #Australia #face #accusations #misleading #consumers #report #Energy
