Subsidising pilot programs to decarbonise Australia’s homes and road fleet will minimise bills and boost local manufacturing.

The Commonwealth Budget failed to take the crucial first step on the path to decarbonising and slashing household energy bills, because it prioritises subsidies for fossil fuels over renewable-powered electrification of our homes, according to Rewiring Australia.

The 2022 Budget contained more than $10.5bn in fossil fuel subsidies, according to an Australia Institute analysis released this week, the vast bulk of which $8bn goes to the Fuel Tax Credits Scheme.

“This budget was the perfect opportunity to start that process with a pilot program to electrify a suburb and a street. It’s disappointing to see taxpayer dollars directed to subsidising fossil fuels rather than investing for a cheaper, cleaner future,” said Rewiring Australia chief scientist, Dr Saul Griffith.

The Budget should instead have directed money towards electrifying Australia’s homes and vehicles, replacing fossil-fuelled devices with solar panels, batteries, heat pumps, induction stoves, electric vehicles and household and community batteries.

“This budget could have been underwriting electric vehicles that run on Australian sunshine and develop the zero-emission vehicle market, but instead is investing in dated technology and the chief source of our domestic emissions.”

Last year, Rewiring Australia modelled the cost benefit of total household electrification for Australia’s 10m homes, demonstrating how Australians could take advantage of the falling costs of electric vehicles, batteries, solar, and wind, to help every Australian household save money.

It found a $12bn investment would retrofit 10m Australian households for full electrification by 2030 leading to national savings of more than $40bn.

And previous modelling, predicated on a petrol price of $1.46, would deliver household savings of close $5,000 per year. However, with petrol now at $2.20 a litre, the annual saving to households is closer to $7,000 every year.

“There are profound environmental and cost of living benefits to making the big switch to renewable-powered electrification,” Dr Griffith said. “When you put this in context, if we redirected one year worth of fossil fuel subsidies to an eight-year program of electrification we could smash domestic emissions by a third and obliterate energy bills and completely decarbonise all 10m households in Australia.

“Beyond the household economics this is a critical national security question. Energy independence weakens the power of oligarchs and petro-states. It is unquestionably in Australia’s national interest to decarbonise, especially our vehicles.

“Renewable backed electrification is a big step toward improving the three great problems of our time, climate heating, cost of living and national security. It is a great shame the Government’s budget missed this opportunity again,” Dr Griffith added.