The government estimates the change will save Victorians up to $1000 on their annual energy bills. D’Ambrosio said government modelling used to calculate that figure was supported by a recent Grattan Institute report.

Grattan Institute climate change and energy program director Tony Wood, who authored the report, said he expected Victorians to save money, but said it remained to be seen if the state government’s $1000 claim stacked up.

“It depends on what your appliances are, what choices you’re facing,” he said. “But there’s no question consumers are going to save money. It’s probably only now a matter of how much.”

He also pointed out that Victoria’s electricity grid was still largely dominated by coal.

“So that means if you switch from gas to electricity today, in the medium term, you’re not going to improve Victoria’s emissions. But in the next few years you will.”

All new public buildings in Victoria, such as hospitals, schools and police stations, that have not already reached a design stage will immediately develop plans to be all-electric, the government said on Friday.

The announcement comes a day after the state government tabled its overdue response to the renewable energy inquiry held during the last term of parliament.

That inquiry, which handed down its recommendations in May 2022, suggested the government “consider enacting a moratorium on new residential gas connections”. In its reply, which was due in September last year, the government said it supported the recommendation in principle.

The gas sector contributes about 17 per cent of Victoria’s emissions, and the energy minister said the gas ban from new homes was a key part of the government’s plan to reduce Victoria’s emissions by 75 to 80 per cent by 2035 and reach net zero by 2045.

“This is a journey. It’s not going to happen overnight. And gas will still be a feature of residential living for a number of years to come,” D’Ambrosio said.

“What we’re doing is making the big steps today that will make a real difference to thousands of Victorians entering their new homes.”

The government will also spend $10 million on a new residential electrification grant program for volume builders, developers and others to provide rebates for solar panels, solar hot water and heat pumps to new home buyers.

Another $1 million will be spent on a training program to help the construction industry adapt to new renewable energy requirements in homes.

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The planning minister said when a gas-connected home was knocked down and rebuilt, the new home could not stay connected to gas if a planning permit was required for the renovation.

Deputy Greens leader Ellen Sandell welcomed Friday’s announcement.

“Banning new connections is an important reform the Greens have been calling for years,” she said.

“But it is strange that Labor acknowledges gas is an expensive, polluting fossil fuel on the one hand, while on the other hand is changing the law to make it easier to open new mines and is approving new gas drilling across the state, including near the Twelve Apostles.”

Master Builders Victoria chief executive Michaela Lihou supported the decision to move away from gas.

“Creating a pathway to a cleaner and more sustainable future is a big part of our vision for the Victorian building and construction industry,” Lihou said.

The Property Council’s national policy director, Frankie Muskovic, said the announcement provided certainty.

“Every new building built with gas will need to be retrofitted in the future, so we welcome this move from the Victorian government to avoid investment in new gas network infrastructure and focus on reducing energy bills and providing cleaner, healthier homes for Victorians,” she said.

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But the policy shift has not come without criticism. Shadow treasurer Brad Rowswell described Friday’s announcement as “desperate policy on the run”.

“We do need an orderly energy transition from our current circumstance to the ways of the future,” he said.

“I don’t think that this decision today will actually lead to lower energy prices. I think that is a furphy by the minister and I think Victorians are not mugs and they recognise that as well.”

The Australian Petroleum Production and Exploration Association, which represents the oil and gas industry, said the state government was removing consumer choice for limited climate benefit.

“The best way to avoid shortfalls and put downward pressure on prices is to bring on new gas supply close to where it is used because the cheapest gas is the gas closest to the customer,” chief executive Samantha McCulloch said.

“We need to ensure policy is based on robust, evidence-based analysis that recognises the importance of gas in supporting the transition of our energy system to net zero.”

Victoria will release an updated gas substitution road map later this year.

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