The Australian Energy Market Commission (AEMC) has conducted a consultation on requests submitted by Energy Consumers Australia and the Justice and Equity Centre seeking changes to the National Gas Rules.
The rapid decarbonisation of the electricity and energy system is essential for Australia to meet its obligations under the Paris Agreement.
The transition to renewable energy in electricity will reduce emissions by approximately one-third and enable decarbonisation of other sectors in the economy.
Since 2018, the Australian Energy Market Operator (AEMO) has engaged CSIRO, supported by Climateworks, to conduct multi-sector modelling to quantify the dynamic influences that shape electricity demand under different emissions reduction scenarios.
That modelling continues to inform AEMO’s planning and forecasting tools, including the 2026 Integrated System Plan (ISP).
In this submission, Climateworks recommends the AEMC pursue rule changes that instruct the Australian Energy Regulator (AER) to update gas distribution regulation to:
- support structured planning as gas demand declines
- prioritise demand-side resources ahead of new gas investment
- protect remaining customers from bearing an excessive cost burden
- align gas planning with whole-of-system and least-cost transition pathways
- ensure the orderly response to the phase-out of gas use.
To manage this transition, the coordination of state and federal government with appropriate management by energy market bodies can aim to stage a least-cost reduction in gas use and networks, only retain gas where essential (e.g., specific industrial feedstocks) and the alignment of national emissions and renewable energy goals.
Broadly, the recommendations in this submission seek to enhance the energy system’s operation and ensure it delivers the rapid transformation needed to unlock the opportunities from a net zero economy. Climateworks welcomes the opportunity to provide further analysis through written material or meetings with the AEMC.
Submission summary
Climateworks recommends that the AEMC:
- Require gas network operators to publish long-term (10-20 year) utilisation forecasts, scenario analyses (including electrification and demand-side alternatives) and decommissioning/exit strategies.
- Embed a regulatory requirement that capex proposals for gas networks include consideration of non-network alternatives, before approval of new or replacement gas assets.
- Establish transparent cost-allocation frameworks that protect consumers who face barriers to electrification — especially low-income households and renters — from bearing excessive costs due to stranded assets or falling utilisation.
- Align the regulatory changes for gas networks with broader electricity market reforms and emissions objectives, ensuring gas network planning is integrated with ISPs, electrification roadmaps and national emissions trajectories.
- Establish a policy prioritisation framework and review mechanism that aligns gas planning with an orderly phaseout, which might include triggered reviews or “early exit points” when utilisation levels fall below pre-defined thresholds (e.g., < 50 % of forecast), enabling proactive decommissioning or network rightsizing and avoiding further lock-in of under-utilised assets.
More detail on these recommendations can be found in the submission [PDF 0.2mb].