The scheme, in one paragraph
From 1 July 2027, Australian LNG exporters will be required to supply the domestic market with gas equivalent to 20 per cent of the volume they export, calculated annually. The regulator can calibrate that obligation downwards when the full 20 per cent is not needed to meet domestic energy security requirements — which is why the scheme is often described as reserving up to 20 per cent rather than a flat 20. Existing LNG contracts entered into on or before 22 December 2025 carry protections.
The logic is straightforward and the frustration behind it is widely shared. Australia is one of the world’s largest gas exporters, and yet east-coast households and manufacturers pay prices shaped by international markets. A reservation scheme is an attempt to break that link by requiring some of the gas to stay here.
Why this matters even if you have no gas connection
This is the part that gets missed, and it is the reason the scheme belongs on an electricity site rather than only a gas one.
Gas-fired generators are frequently the marginal source of electricity on the east coast. When demand is high or renewable output is low, gas plant is often the last generator dispatched — and in most electricity markets the last generator dispatched sets the wholesale price that everyone receives. That means the price of gas can influence the wholesale price of electricity in periods when no gas is flowing to your house at all.
So a household that switched off gas entirely, or never had it, still has an interest in domestic gas prices. If the scheme genuinely lowers the delivered gas price, some of that should eventually reach electricity bills. If it does not, nothing reaches them.
That transmission is slow and indirect, though. Wholesale movements take time to reach retail tariffs, and they arrive alongside network charges, environmental scheme costs and retailer margins. Nobody should expect to see a gas reservation line on a 2027 electricity bill.
The hard question: available, or cheap?
There is a distinction at the centre of this scheme that decides whether it works, and it is easy to skate over: requiring gas to be made available domestically is not the same as requiring it to be sold cheaply.
A volume obligation guarantees supply. It does not by itself guarantee a price. If reserved gas is offered into the domestic market at prices benchmarked to international netback values, the volume changes but the cost to a buyer may not move much.
The Energy Users Association of Australia — which represents commercial and industrial energy users, whose members make bricks, glass, steel, aluminium, paper, food and beverages and employ over a million Australians — put exactly this objection in its submission. It argued the draft legislation carries structural weaknesses, definitional ambiguities and governance gaps, and that it does not adequately address affordability, additionality, transparency and predictability, or enforceability. Its sharpest concern is a reservation obligation that does not deliver genuinely additional gas at a competitive price, and it warns the scheme risks locking in higher costs for electricity and essential goods rather than lowering them.
The EUAA is an interested party representing large energy buyers, not a neutral umpire, and its members would benefit from cheaper gas. But the specific criticism — that volume is not price, and additionality is not guaranteed — is a structural point, not a self-interested one, and it is the right thing to watch as the legislation is finalised.
What would tell you whether it is working
Three things, none of which will be obvious from a bill.
Whether the gas is additional. If exporters meet the obligation by redirecting volumes they were already selling domestically, nothing changes. The scheme only adds supply if the reserved gas would otherwise have been exported.
How the domestic price is formed. Watch whether the framework produces a genuine domestic price signal or simply an obligation to offer gas at whatever the international benchmark implies.
What the regulator sets the obligation at. Because it can be calibrated below 20 per cent, the headline figure is a ceiling rather than a commitment, and the number actually applied each year is the one that matters.
What to do in the meantime
This scheme does not start until 1 July 2027, and its effect on retail bills — if any — would arrive later still. It is not a reason to wait before doing anything.
If you have a gas connection, the things within your control are unchanged: the plan you are on, and how much you use. Our guide to saving on your gas bill covers the usage side, and if you are weighing whether to keep gas at all, gas versus electricity running costs compares them on the appliances that actually matter.
And whichever way the policy lands, the difference between the best and worst plan available at your address today is larger and more certain than anything in this legislation. Upload a recent bill and we will show you what that gap is for your house.
Frequently asked questions
When does the gas reservation scheme start?
The obligation commences from 1 July 2027.
Is it 20 per cent, or up to 20 per cent?
The obligation is set at 20 per cent of export volumes, but the regulator may calibrate it downwards where the full amount is not required to meet domestic energy security needs — so 20 per cent functions as a ceiling.
Does the scheme force gas to be sold at a low price?
Not directly. It is a volume obligation. That distinction — available versus affordable — is the main criticism raised by energy user groups during consultation.
Will this lower my electricity bill?
Possibly, indirectly and slowly. Gas generation often sets the wholesale electricity price at times of high demand or low renewable output, so cheaper gas can flow through to electricity. It would not appear as an identifiable line on a bill.
What about existing export contracts?
LNG contracts entered into on or before 22 December 2025 carry protections under the proposed framework.
Does it apply across Australia?
The policy problem it targets is east-coast gas supply and affordability. Western Australia has operated its own domestic gas reservation policy for many years.
Should I wait for this before switching plans?
No. It begins in July 2027 and any retail effect would come later. The difference between plans available to you today is larger and far more certain.