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Gas Appliance Manufacturers Association Australia
15, 441 St Kilda Road Melbourne 3004 PO Box 7622 Melbourne 3004 Victoria Australia
(GAMAA T 03 9867 0292 F 03 9867 0157 associations@aigroup.com.au wvM.gamaa.asn.au
ABN REGISTERED 381
of
i 76 660439 676 No 3313
Energy Branch
Department of Climate Change, Energy, the Environment and Water Via:
EnergvPerformance@dcceew.gov.au
3 Feb 2023
National Energy Performance Strategy Consultation paper — GAMAA response
The Gas Appliance Manufacturer's Association Australia (GAMAA) was formed in 1957 and is the peak industry body representing the interests of Australian manufacturers and suppliers of domestic and commercial gas heating, hot water and cooking appliances and components. Our 37 member companies employ a combined total of 4,500 workers in Australia. The vast majority of the 18 million domestic gas products enjoyed by Australian consumers are supplied by GAMAA members, with significant local design and manufacturing content.
Our primary activity is to work with our members, government agencies, political representatives and other industry stakeholders to develop and implement workable, equitable and practical initiatives, standards and regulations that result in better economic, social and environmental outcomes and address the unique role of gas products in Australian homes and businesses in the economy wide transition to net zero.
GAMAA welcomes the opportunity to contribute to the consultation on developing a national Energy
Performance Strategy (NEPS). GAMAA is fully supportive of the broad objective to improve Australia's energy performance and Australia's commitment to net zero carbon emissions by 2050, however we have concerns with the emphasis placed on electrification.
The consultation paper quotes an International Energy Agency (IEA) report as considering energy efficiency 'the first fuel' and the consultation paper uses this to justify the position that electrification (fuel switching) will play a 'key role' in the NEPS. Electrification is only one of many aspects the IEA considers in achieving energy efficiency and does not play the key role. Also, by their very nature, IEA reports present broad international perspectives and as such do not accurately reflect Australia's unique energy situation and opportunities.
In an Australian context, electrification of the existing gas load will not achieve the objective of energy performance improvements and decarbonisation at least cost, risk and disruption. Rather, this will be realised through both renewable electricity and renewable/decarbonised gas. As evidenced by Frontier
Economics in its September 2020 report(l), decarbonising the gas networks using renewable gas can be done at less than half (41%) of the cost of electrification whilst maintaining the capacity of already inbuilt energy
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Gas Appliance Manufacturers Association ofAustralia
L5, 441 St Kilda Road Melbourne 3004 PO Box 7622 Melbourne 3004 Victoria Au
T 03 9867 0292 F 03 9867 0157 associations@aigroup.com.au www.gamaa.
ABN 676 REGISTERED storage. Wind and solar are low cost electricity generation methods, but the storage required to enable grid reliability and supply 24/7 does not result in a low cost electricity system.
The Australian gas industry is already on a pathway to reach net zero carbon emissions, as outlined in detail in in the ENA response to this topic.
The Benefits of Gas Infrastructure to Decarbonise Australia, Frontier Economics, September 2020
GAMM 76 660439 No A00381 330
The most energy efficient outcomes are not necessarily the most economically efficient outcomes when seeking least-cost energy performance improvements. This holds particularly true for appliances, some key points below:
a. Per unit of appliance cost, gas appliances provide the greatest heating and hot water amenity out of
all of the available technologies. The replacement of older, less efficient gas appliances with modern
efficient ones offers the most cost effective efficiency improvement and carbon abatement,
particularly as gas decarbonises, and will retain the amenity levels consumers expect.
b. It has been common practice to overstate efficiencies of electrical technologies, such as heat pumps,
relative to gas appliances for all ambient conditions. As ambient conditions become lower, heat
pump efficiency decreases markedly to well below their 'rated efficiency' which is often downplayed
or ignored when the need for heat is greatest. In contrast, the efficiency of gas appliances does not
decrease with cold ambient temperatures.
c. There is widespread misinformation regarding the cost of replacing gas appliances with electric
appliances, this is often assumed to be for minimal or no cost. This applies particularly in colder
climates such as Victoria which is heavily reliant on gas for heating and hot water. According to
Frontier Economics, the additional cost to Victorian households of replacing their existing (natural)
gas appliances with electric heat pumps, compared to replacing them with renewable (hydrogen) gas
appliances, is likely to cost Victorian consumers somewhere between $14 and $31 billion for whole
of home heating which is most common(1 ). This does not include costs for structural changes to the
gas or electricity distribution networks.
d. There is a common misconception that electrification of domestic gas appliances will result in lower
emissions than gas over the appliance lifetimes in cold climates, such as Victoria. This is contrary
to comprehensive modelling by the Future Fuels CRC which shows electrification of the gas load in
Victoria will lead to an increase in carbon emissions in 2025 and has no emission impact in 2035,
based on the current Victorian renewable energy targets for electricity(2 ).
1
Frontier Economics — Cost ofswitching from gas to electric appliances in the home, June 2022, Figure 10.
htt s: amaa.asn.au w -content u loads 2022 07 Frontier-Economics-Re ort-GAMAA. d
2
FFCRC RPI .2-02- Regional case studies on multi sector integration led by Professor Pierluigi Mancarella at the University of Melbourne.
Gas Appliance Manufacturers Association Australia
15, 441 St Kilda Road Melbourne 3004 PO Box 7622 Melbourne 3004 Victoria A
(GAMAA T 03 9867 0292 F 03 9867 0157 associations@aigroup.com.au wvM.gamaa
ABN REGISTERED 381
Below are our responses to some of the topics/questions contained in the NEPS consultation paper:
1. Improving Energy Performance
Lowering Consumer energy costs
Improvements to the building fabric (such as insulation and window treatments), rather than
replacement of heating and cooling appliances, are the most economically efficient means to reduce
energy costs associated with heating and cooling throughout the life of the building, regardless of the
energy source and whether the occupants are owners, tenants and/or have low incomes.
of
76660 439676 331J
Claimed energy cost saving resulting from the replacement of gas with electric appliances are often
overstated and ignore the significant up-front cost of appliance replacement and associated works to
the dwelling to enable electric appliances which, in many cases, results in 'pay back' periods well in
excess of 10 years(3) once potential running cost savings are considered, which is not economically
viable.
ii. Reducing emissions
As per our comments to (i), GAMAA agrees that improving the energy performance of fabric of
residential buildings is a no regrets decision and will significantly reduce Australia's emissions.
However, we do not believe electrification of the existing gas load will achieve such reductions in an
economically efficient manner or achieve the amenity that Australian consumers demand.
Taking pressure of the system
We agree that initiatives to reduce energy demand will take pressure of 'the energy system', which we
consider as comprising both gas and electricity. The consultation paper acknowledges that the
accelerating shift of the electricity system from non-renewable to renewable electricity sources is a
momentous task requiring enormous investment. Electrification of the gas system will further
compound this, resulting in a reduction in the reliability of the electricity network and will not result in
economically efficient decarbonisation. Modelling by Frontier Economics in September 2020(4) shows
3
Frontier Economics — Cost ofswitching from gas to electric appliances in the home, June 2022, Figure 11.
htt s: amaa.asn.au w -content u loads 2022 07 Frontier-Economics-Re ort-GAMAA. d
4
The Benefits of Gas Infrastructure to Decarbonise Australia, Frontier Economics, September 2020
Gas Appliance Manufacturers Association ofAustralia
L5, 441 St Kilda Road Melbourne 3004 PO Box 7622 Melbourne 3004 Victoria Aus
T 03 9867 0292 F 03 9867 0157 associations@aigroup.com.au www.gamaa.a
ABN 676 REGISTERED
that decarbonising the gas networks using renewable gas can be done at less than half (41%) of the
cost of electrification of the same load. iv. Improving health and comfort
We are not surprised by the finding that effective heating in colder climates such as Victoria leads to
significantly improved health outcomes. The United Nations lists adequate housing as a human right
and includes access to energy for cooking and heating amongst a long list. Gas remains the most effective
form of heating in cold climates, which is why it is the fuel of choice for the vast majority of Victorian
consumers. Consumers should not be denied this choice, nor is this economically efficient in the shift to
improved energy performance and decarbonisation. We note that in Western Australia the use of gas is
encouraged to ensure the reliability of the electricity network and minimise the frequency of blackouts.
Gas Appliance Manufacturers Association
ofAustralia
15, 441 St Kilda Road Melbourne 3004 PO Box 7622 Melbourne 3004 Victoria Australia
GAMAA T 03 9867 0292 F 03 9867 0157 associations@aigroup.com.au www.gamaa.asn.au
ABN REGISTERED 381
GAMM 76 660439 No 33U
2. Strategy Focus Areas
2.1 Governance
Energy governance
a. How can demand considerations be better integrated into Australian energy governance and
what are the priorities for change?
As a matter of principle, GAMAA supports national leadership and a synchronised approach
between jurisdictions in all areas of our energy system transformation and we commend Federal
Government efforts in this regard.
We support economically efficient energy demand reduction initiatives. Highly efficient gas
appliances are already available and can play a key role in delivering economically efficient
reduction of demand on our energy system and achieve decarbonisation, especially as the gas
supply continues on the path to decarbonisation, and should therefore form an integral part of
such initiatives.
b. What new or modified coordination mechanisms or institutional responsibilities would be
appropriate to better drive energy performance action in the future
National coordination of a renewable gas target to effectively mirror the support already provided
for renewable electricity
A nationally coordinated transition plan for the roll-out of hydrogen blending into the residential,
commercial and industrial gas networks supported by all levels of Government and industry.
A transition plan to enable 100% renewable gas into the gas networks beyond what is being
demonstrated through pilot projects.
(iv) A structured plan, developed in consultation with industry, to underpin the transition away from
the natural gas network and appliances to a network and appliances using decarbonised gas.
A coordinated national approach to update gas and safety regulations and standards (gas quality,
product safety and installation) so these account for the transition to renewable and zero
carbon gases, with a corresponding training and accreditation program for technicians to
work with such gases and the associated infrastructure and appliances. This is paramount to
maintaining the enviable safety record the gas industry has maintained over many decades.
This is required to build on the activities of the Future Fuel CRC and Standards Australia in
developing technical guidance and standards, this will enable a business as usual approach
rather than an ad hoc development.
76 660 439 676 No AOO 33U
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Gas Appliance Manufacturers Association ofAustralia
15, 441 St Kilda Road Melbourne 3004 PO Box 7622 M
T 03 9867 0292 F 03 9867 0157 associations@ai
ABN 676 REGISTERED 381
ii. Targets
GAMAA strongly supports a nationally coordinated renewable gas target to effectively mirror the
support already provided for renewable electricity. This will provide a level of certainty to the
market in general and will encourage GAMAA members to invest in the mass production of
renewable gas compatible appliances (such as hydrogen).
'Energy efficiency' and 'demand reduction' are technically different (but related) aspects. Targets
for either must be defined in detail and clearly articulated. The consideration of economic
efficiency must be paramount in defining and setting any targets.
2.2 Residential
i. General
a. What are the key opportunities to improve the energy performance of new and existing
residential buildings?
The existing national initiatives listed in the consultation paper (NCC, NatHERS, GEMS and
E3) already address opportunities to improve energy performance of residential buildings, with
a planned trajectory for increasing stringency going forward improving the performance of the
building fabric.
b. What opportunities are there to improve or streamline existing policies aimed at empowering
consumers to undertake energy performance improvements in their homes? and:
c. What are key financial and non-financial barriers to the uptake of energy performance
improvement opportunities? How can these barriers be overcome?
Up-front cost is the key consideration (and financial barrier) for the majority of consumers.
Improvements to the building fabric (such as insulation and window treatments), are the most
economically efficient means to reduce energy costs associated with heating and cooling
throughout the life of the building, rather than replacement of heating and cooling appliances,
regardless of whether the occupants are owners, tenants and/or have low incomes. As such,
targeted financial support for building fabric improvements is recommended.
d. How can demand management and electrification support lowering energy bills and emissions?
The aspects of 'demand management', 'reducing energy demand' and 'electrification' are
technically different from each other. Demand management has the potential to shift electricity
demand away from peak periods to periods of lower demand or higher production and therefore
has the potential to put downward pressure on electricity bills, as long as consumers still obtain
the required amenity. Improving thermal efficiency of the building fabric will reduce energy
demand (total consumption) from both the electricity and gas systems and will reduce
electricity and gas bills for the same levels of amenity. However, as outlined previously, we do
not believe electrification of the existing gas load is economically efficient
Gas Appliance Manufacturers Association ofAustralia
15, 441 St Kilda Road Melbourne 3004 PO Box 7622 M
GAMAA T 03 9867 0292 F 03 9867 0157 associations@ai
ABN REGISTERED 381
GAMAA 76660 439 331.1
nor will it provide consumers with the amenity they require. Electrification will increase the
demands on the electricity system, decrease security and reliability of supply and result in
upward pressure on electricity bills.
2.3 Commercial and 2.4 Industry
Our comments for the residential sector apply broadly to the commercial and industrial sectors. However, the challenges and negative impacts of electrification of the commercial/industrial gas load are magnified compared to the residential sector.
By their very nature, the systems for delivering space heating and hot water in commercial and industrial applications are significantly larger and more complex and much more integrated into the design of buildings compared to the residential sector. The appliances themselves are only components of such systems. This makes it even more challenging and costly to replace gas with electric appliances and is unlikely to result in economically efficient outcomes.
The negative impacts of electrification of the commercial gas cooking load (hospitality and commercial catering) are even more pronounced. Electric cooking appliances offer no technical efficiency benefits and the replacement of gas with electric cooking appliances will not be economically efficient, nor is it compatible with the many cuisines with which the intense heat and direct flame from gas are intrinsic.
At an industrial level, process heat is obtained from gas due to the very large energy demand and high temperatures required and electrification is unlikely to be economically efficient.
2.5 Supply chains and workforce
We commend the government's commitment to growing local manufacturing capabilities and working closely with domestic appliance manufacturers to support the transition to improved energy performance.
GAMAA members supply the vast majority of the 18 Million gas appliances in use around Australia. These appliances are compatible with local climatic conditions, meet the performance expectations of Australian consumers, and are compatible with local building design, climatic conditions and trade practices. Many of our larger members manufacture, supply and provide service support for gas and electrical appliances and achieve viable local manufacturing economies of scale due to the gas appliances for the Australian market. In contrast, the majority of electric appliances are imported.
Considering the scale of expansion required, electrification of the gas load is not economically efficient. In
Victorian homes during cooler months natural gas currently provides twice as much energy as the electric network. Additionally, electrification will undermine local appliance manufacturing capability and jobs,
Gas Appliance Manufacturers Association ofAustralia
15, 441 St Kilda Road Melbourne 3004 PO Box 7622 M
T 03 9867 0292 F 03 9867 0157 associations@ai
ABN 676 REGISTERED 381 whilst further stressing supply chain resilience in the face of an increasingly adverse geopolitical environment.
Consideration should be given to financial support to both appliance manufacturers and consumers to support the transition to renewable gas appliances.
Gas Appliance Manufacturers Association ofAustralia
L5, 441 St Kilda Road Melbourne 3004 PO Box 7622 Melbourne 3004 Victoria Australia
T 03 9867 0292 F 03 9867 0157 associations@aigroup.com.au www.gamaa.asn.au
ABN REGISTERED 381
GAMM 76660 439 676 No AOO 330
The Equipment Efficiency Program, with the involvement of E3 Review Committee (on which GAMAA is represented), is best placed to identify and prioritise technical (thermal) efficiency improvement initiatives for both gas and electrical appliances, noting that gas appliances are already available that approach the limit of thermal efficiency as dictated by the laws of physics.
Energy performance improvements and decarbonisation at least cost, risk and disruption will be realised through both renewable electricity and renewable/decarbonised gas. A coordinated approach to update gas and safety regulations and standards (gas quality, product safety and installation) so these account for the transition to renewable and zero carbon gases, with a corresponding training and accreditation program for technicians to work with such gases and the associated infrastructure and appliances, will be paramount in achieving economically efficient outcomes.
We look forward to further dialogue on this important matter. In the meantime, should you have any queries on this submission please contact Leon Bogers leonb@rinnai.com.au, 0419 531 619 or myself ross.iamieson@sitgas.com.au, 0409 858 077.
Yours sincerely,
Ross Jamieson
President
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