"Western Australia does not need new gas - gas is not a transition fuel, but diverts investment away from renewable energy," Conservation Council of WA spokesman Liam Lilly said.
"There is no future with gas," he said, supporting calls by unions for an exit strategy for gas workers.
The Economics and Industry Standing Committee Inquiry recommended the state continue to reserve 15 per cent of offshore production for domestic use, which contributes around half of the state's local supply.
But more forcefully holding producers to "good faith" supply agreements would be vital for ensuring energy security, they found.
The committee also warned WA to allow onshore gas projects to export LNG only if the domestic market was adequately supplied.
Australian Energy Producers WA director Caroline Cherry said gas companies were already complying with their domestic gas commitment agreements.
Ms Cherry said allowing onshore projects to access export markets would help to underpin domestic gas security because it would make more projects commercially viable.
Having to renegotiate existing domestic gas commitment agreements and the call for a "use it or lose it" measure would cause instability and uncertainty, thwarting investment in new gas supply, she said.
The domestic gas policy was initially lauded during the 2022 energy crisis for sparing WA from the price spikes that hit homes, businesses and industry on the east coast.
The committee inquiry was sparked by fears a domestic gas shortfall was imminent, and that producers would default on their commitments because it was more profitable to export LNG.
The contentious Browse development, which is hanging in the balance as governments mull approval, is critical to long-term energy security and resolving a forecast post-2030 gas supply shortage, according to its proponents.
WA opposition energy spokesman Steve Thomas says the gas industry needs long term certainty. (Aaron Bunch/AAP PHOTOS)
Others want access to export markets from onshore developments, including opening up the Kimberley for fracking.
From 2032, the domestic gas shortfall would exceed 350 terajoules per day and substantial new sources of gas would be needed to meet demand over the coming decades, according to the final report.
The committee found the core objective to secure WA's energy needs and ongoing economic development "remains relevant and appropriate but needs expanding and clarifying", which should be negotiated with industry.
New laws were recommended for where the gas reservation policy falls short, including how it interacts with the electricity system, domestic-only gas projects, and to allow for better forecasting of supply and demand.
WA opposition energy spokesman Steve Thomas said most of the state supported retaining the 15 per cent offshore reservation policy.
But he warned there would simply be more uncertainty for an industry that needs long term certainty.
"It is essential that those industries that use gas in Western Australia can access adequate supplies. This underpins thousands of jobs," he said.
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