The Federal Government today, September 10, 2026, released an exposure draft for a new Domestic Gas Reservation Scheme, a significant policy move aimed at increasing local supply and placing downward pressure on Australian gas prices. The scheme is designed to ensure that Australian consumers have access to more affordable gas, with a target of securing up to 200 additional petajoules (PJ) of gas annually from exporters by 2028.
This landmark reform seeks to mitigate the risk of market volatility and potential supply shortfalls, which have historically driven up gas bills for households and businesses across the country. The Australian Energy Market Operator (AEMO) had previously forecast possible shortfalls of up to 140 petajoules, making this intervention a critical step in bolstering energy security and affordability.
Addressing Market Volatility and Future Supply
The new Domestic Gas Reservation Scheme introduces a framework that requires gas exporters to commit a portion of their supply to the domestic market. The licence application process for this scheme is set to commence from January 1, 2027, with the Domestic Supply Obligation (DSO) officially taking effect from January 1, 2028. This timeline is designed to align with existing industry contracting cycles, aiming for a smoother transition.
“This is a landmark Labor reform that will place significant downwards pressure on price paid by Australian gas consumers. The scheme ensures domestic customers can buy from a larger pool of gas, reducing the risk of tight market conditions driving price spikes, promoting long-term contracting and shielding them from global volatility.”
The policy’s intent is to create a larger pool of gas available for domestic customers, thereby reducing the likelihood of price spikes caused by tight market conditions. It also aims to encourage long-term contracting, providing greater certainty for industrial users and, by extension, stability for retail gas prices. This comes as recent data from the Australian Energy Regulator (AER) for Q2 2026 showed domestic gas prices declined sharply, averaging $9.05 per GJ, down 14.4% from the previous quarter, driven by low domestic demand and limited impact from the Middle East conflict. However, longer-term pressures and global volatility remain a concern, which this new scheme aims to address.
Stakeholder Engagement and Consultation
The Federal Government’s exposure draft follows extensive consultation, with over 140 submissions received in response to the initial Draft Design Framework. Feedback came from a broad spectrum of stakeholders, including gas producers and exporters, retailers, large industrial users, trade partners, and state and territory governments. This feedback has been considered in shaping the exposure draft, aiming for a framework that is predictable, transparent, and pro-investment, while still delivering affordable, long-term domestic gas supply.
The consultation period for the exposure draft is now open, with submissions closing on September 24, 2026. This allows industry and the public further opportunity to provide input on the proposed legislative and market reforms. The Department of Industry, Science and Resources Consultation Hub hosts the complete exposure draft package and consultation materials.
Impact on Australian Households and Businesses
For Australian households and small businesses, the introduction of a robust Domestic Gas Reservation Scheme could translate into more stable and potentially lower gas bills in the coming years. While direct price drops are not immediate, the increased supply certainty and reduced exposure to international price shocks are expected to provide a buffer against future increases. This contrasts with the broader energy bill relief landscape, where universal federal energy credits concluded at the end of 2025, leaving targeted state and territory concessions as the primary support for many households.
This policy is a distinct measure from the Australian Energy Market Commission’s (AEMC) gas network reforms, which, announced in August 2026, focused on changes to gas connection charges for new retail customers. The AEMC’s rule requires newly connecting retail gas customers to pay the upfront cost of their connection, moving away from shared costs across all customers. The Federal Government’s reservation scheme, by contrast, targets the fundamental supply and wholesale price of gas itself. The effectiveness of such policies in managing overall energy costs remains a key focus for Daily Energy News readers, particularly as other energy market dynamics continue to evolve. For a broader understanding of support available, refer to our guide on Australia’s Energy Bill Relief Landscape in 2026: A Comprehensive Guide to State and Federal Support.
As Australia continues its energy transition, policies that balance supply security, affordability, and the shift towards cleaner energy sources will be crucial. This Domestic Gas Reservation Scheme represents a significant federal effort to directly influence gas market outcomes for the benefit of Australian consumers.