ESIA Submission - Vic Gas Substitution Roadmap, 30 July 2021

The VEU is a key mechanism to support a transition from gas with recommendations requiring action ASAP to address ongoing barriers that include:

  • Transitionary Emission Factors are distortionary and actively discourage gas energy efficiency and fuel switching, so activities that reduce gas consumption should be subject to an uplift over the period to 2025 by the amount that electricity savings have been overstated.
  • Streamline improvements for PBA under the VEU: Significant amounts of gas are consumed by business which means that deemed methods are not often likely to be applicable and project-based approaches are required. The Project Based Activity (PBA) under the VEU to date has been complicated and very few activities have been implemented. We believe that there is significant room for improvement.
  • Incorporate Large Energy Users in the VEU: Given there is further delay in certainty regarding treatment of LEUs under the VEU (they use a significant portion of the state's gas demand and currently don't have to participate), the ESIA is advocating that either:
    • LEUs that have not opted in to the VEU should be able to undertake PBA activities only under the VEU as soon as possible without having to opt in. Or,
    • change the opt-in process so that it only needs to be done prior to VEEC creation. That means that any projects eligible for creation in 2023 could still opt-in by June 2024 (or whatever the vintage requirements are). By that stage hopefully the LEUs will have certainty about their obligations.

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