3AW Morning’s Neil Mitchell talks to Jon Seeley, Tuesday 15th November 2022.
Transcript from the video:
Gas. This is developing as a late election issue that the Premier’s promised to reinstate the SEC as publicly owned, he’s even wearing jackets with the SEC logo. He says it will find trades people drive down the cost of power, the government also announced July rebates $2600 to households to replace ducted gas, heating, and cooling with electric. The opposition, I talked to Matthew Guy yesterday, 100% domestic reservation policy on conventional onshore gas. I’ve read endless reports about this. It is confusing, at times it is contradictory. Bottom line how much gas is there in Victoria, how do we get it without destroying the environment? And does it bring your bill down regardless of how you do it?
Now on the line (I guess he’s got some skin in the game), Jon Seeley, Managing Director of Seeley International, which is Victoria’s biggest supplier of gas heaters, is on the line from the United States. Jon Seeley, good morning.
Good morning, Neil. How are you?
I’m ok. First point, how much gas do we know, there’s this report today from Ernst & Young which gives indication, how much gases are in fact underground here in Victoria that could be mined?
That’s not really my expertise Neil, but certainly I’ve read the same report and I believe from all the sources that I read that there’s a huge amount; and that mining it will actually help not only the cost but would also help a rational transition to net zero and help us reduce emissions rather than the current approach of the Victorian Government, which we say is driving up emissions.
I will get to that in a moment but if you do mine it, how do you mine it? Fracking won’t happen, fracking is finished in Victoria, isn’t it?
Yes, and I’ve got to say Neil I don’t have any expertise in that area, we’re manufacturers of gas heaters and evaporative coolers and we also have a full range of reverse cycle air conditioning, so to your point we do have an interest in this, but our interest is in consumers getting the very best air conditioning, whether its gas heaters, whether its reverse cycle or electric, but also a solution that’s going to cost them as little as possible in energy but also give them a good result.
So, what’s the way to achieve that?
Well Victorian’s love gas heating and for very good reason, it’s so much more effective in many ways than reverse cycle heating, and given the infrastructure we’ve already got in Victoria, it would be just truly ridiculous to abandon it. In the short term, when we just abandon gas and have a rapid switch to electrification, we put more demand on our electric system which is barely coping right now, and we’re talking doubling it right? Because half of the energy coming into Victorian homes is gas, half is electric. So, if we abandon gas, we need to double the demand on the electricity system, and in the short term that means we burn more coal, now that drives up emissions and that’s what’s happening at the margin right now.
Well, the energy minister, Lily D’Ambrosio said yesterday “it’s in the interests of fossil gas companies (and you’re not a fossil gas company but you’ve got an interest as you said), to exaggerate the cost of electrification and stand in the way of Victorian’s getting a better deal through going all electric”. What do you say would be the effect of going all electric?
So ultimately, we are fine with that. We are absolutely fine. We are not arguing that gas should always be there. Actually, there’s a very rational way forward for renewable green gas and there’s a lot of work being done to bring fully green hydrogen gas or fully green, biomethane, renewable gas, but we’re not ready for it 100% yet. Equally the electricity system is far from ready for a rapid switch to electrification. As we know, and as even the advocates of electrification acknowledge, they’re talking tens of billions of dollars of additional investment and many years to get the electricity grid up to that point where it can take all that demand, so we say a sensible transition is a rational one, where we continue to use gas, we transition that to green gas over time, and we continue the investment, so the Victorian government in our view should be investing in more gas not less if they truly want to drive down emissions and also if they want to manage economic impacts for consumers.
Of course, supply is part of that, the moratorium on looking for onshore gas, does that hurt, has that kept the price up?
I have no doubt, and again people smarter than me about those things have gone on record and on the Ernst & Young report, in terms of pricing (as you said), the Victorian energy minister mentioned that it might be in our interest to exaggerate the cost for switching, when in fact we can show very clearly that the Victorian government’s gas substitution road map seriously underestimates the cost of a household switching. When they come with a figure of $7000–$13,000 per household, but with an asterisk saying that omits the cost of upgrading the switchboard, well unfortunately if you double the demand in your house you will have to upgrade your switchboard and that adds a huge amount of cost, so an independent costing has been done, for a typical Victorian household it’s three times as much as what the Victorian government is saying, it’s $21,000-$41,000 per household, so any payback period that she might be imagining is pushed out at least 3 times, worse than that, if it actually continues to drive up the cost of electricity, which it is doing, because it’s putting too much demand on a system that can’t cope with it, actually there’s no payback period ever and consumers just have to continue to pay more as well as driving up emissions because at the margin we’re burning more coal.
Ok in simple terms…
We’re all agreed on the goal right, it’s a transition away from all fossil fuels, totally agree with that, but if you do it in a precipitous way, if you try and rush that, which the government is trying to do by its current policies, you have the exact opposite effect, unintended consequences, you’re driving up emissions and you’re driving up costs and that’s exactly what’s happening in Victoria right now.
Driving up conversion costs and potentially the price of the power as well, I guess. What about, have you had a look at the opposition policy, it’s pretty thin on detail, have you had a look at that?
Just picked up bits of it from the press, and you know it seems like they’re starting to talk about reversing some of these incentives for people and continuing to support the adoption of more efficient gas appliances and continue to support the work that has been done on green gas, hydrogen, biomethane.
I was going to ask about that, if the type of the gas changed, if we moved to hydrogen do we use the current infrastructure or not?
Yes, so to get to 100% hydrogen, there’s significant gains that can be made right now, and in some parts of Australia it’s been demonstrated and happening, to inject hydrogen, green hydrogen into the gas as a mix. To get to 100% hydrogen, most cases the infrastructure will need to be upgraded but that can be done gradually, and it will be done, the gas companies are saying they are committed to doing it, by well and truly 100%, carbon free by 2050, which is exactly when other government are aiming to get to 0 net emissions.
If the government wins (and it seems likely to win) and pursues these policies, when do (well if you’re right) when do the consumers feel the pain?
I think they’re already feeling it, and I think they’ll just continue to feel it more, because individuals are being incentivised to put in all electric heating and cooling and as I said we also sell that, so we’re fine as a business, however, all of that product is not Australian made, it’s made overseas, so we have a financial interest in the business but we also have an interest in Australian manufacturing, we have an interest in our customers, we have an interest in our employees, and the many thousands of employees who service people and so on that will be displaced by a rapid transition.
Thank you very much for your time, Jon Seeley thank you.
Jon Seeley Managing Director Seeley International, biggest supplier of gas heaters. I said in the beginning he’s got skin in the game obviously, but the way he describes it, his skin can survive, regardless of what happens, he supports that change to renewables or to cleaner gas.