Interview with Kieran Gilbert, Sky News, PM Agenda

Kieran Gilbert
energy market, transition to renewables, capacity mechanism, gas trigger

GILBERT: I began by asking Mr. Bowen whether he was confident further interventions can now be avoided once the market suspension is lifted.

BOWEN: Yeah well basically Kieran, I said at the outset after the action by AEMO last Thursday that this would last not a day longer and not a day less than AEMO judged necessary. And that's exactly what the Chief Executive and I announced this morning, a staged carefully managed prudent return to more normal market conditions starting at 4am tomorrow. AEMO will monitor the situation very carefully, after generators are allowed to bid back into the system at 4am and then they’ll make further staged judgments about what is prudent. Now, there remain some risks in the system, of course, and we are very vigilant to that. And you know, if there are any large, unexpected outages that's going to put enormous pressure back on the system, but we have had a lot of generation come back on in recent days, we have seen the market, such as it is, as it's been suspended, but we've seen circumstances return to more normal sorts of activity. And I'm confident in the judgment that's been made that this is the right thing to do. Now, the system has been under enormous pressure KG in recent weeks, as you well know, but we've managed to avoid any blackouts. We've managed to avoid any load shedding and that's come about because of careful, prudent and well-informed management. Federal and State Governments working together, very very closely and our excellent regulator, the AER and the excellent market operator working very closely across the board. So we've come this far and we remain vigilant but we remain very focused on the task of keeping the lights on for the Australian families.

GILBERT: It was interesting Daniel Westerman, the AEMO chief pointed out just how much renewable capacity is looming in terms of the provision of renewables, but it's the transmission and storage gap that remains. Is it now a race in your view to build that transmission and storage capacity, sufficient enough to make the most of the renewables that are out there and growing in terms of their market share?

BOWEN: And getting more on Kieran, getting more on. And yes, it is a race, and we're starting 10 years late. That's the point. We've had 10 years of denial and delay and now we're starting very late in this process. So we've gone to the election with a very substantial policy of investing in transmission that will bring on more renewables, they'll allow all that private sector investment to come forward, that will help us build a storage going forward. And that's what a capacity mechanism is all about too, building that storage, focused on storage. Because we're going to get more renewables into the system, we need more renewables into the system, the previous Government denied and delayed the importance of renewables. It's absolutely vital, but we've got to build the framework for them to work properly, that means transmission, and that means storage, the change of Government means that it'll become a reality. 

GILBERT: With the capacity mechanism, how soon do you want this in place to in terms of this transition? And in that context, I'll just put something to you. This is from Susan Ley this morning, the Deputy Liberal leader, she says, quote, unquote, on Sky News Today, she said “Labor talks up the acceleration to renewables and that takes confidence out of the fossil fuel market”. She said coal fired power stations heard that message from Labor. That's her point this morning in terms of her response to the energy crisis, that there hasn't been enough focus on those more traditional energy sources. What do you say in response? And further to that the capacity mechanism, how crucial is that as a piece in all of this?

BOWEN: Well, that's just the sort of nonsense we've come to expect from Peter Dutton’s Liberals since the election. I mean, they haven't gotten the memo from the Australian people. And they're just making this up as they go. I mean, this is a situation brought about by nine years of policy dysfunction. I mean, they should be apologizing to the Australian people not blaming the incoming Government for the mess that they left. I mean, these guys are like the rock band that trashes the hotel room and then complains it hasn't been cleaned up before breakfast, they caused this damage and bizarre rants about too much renewables or too much focus on renewables from the new Government. I mean, we've been in office for four weeks. To be fair, we're just dealing with the crisis that they have left. 

In relation to a capacity mechanism, it's important, Kieran, I made that clear. States and Territories agree with me, we need to make good progress on it because it's that safety net underpinning the transformation that has to happen to the renewable economy, to 82% renewables in our system by 2030. We've got to have that safety net there. Now I want it to focus on new technologies on pumped hydro on storage, and those sorts of things that will be provide that extra level of reliability. But we've got the latest report from the ESB, the Energy Security Board, State and Territory Ministers will work very cooperatively with me as they have done so far to turn that into reality to get the policy settings, right. We want to get on with it. It is important. There are other things that we're working on as well, which we've announced but this is an important step.

GILBERT: So in that context, before we move on to a few other energy matters, do you have a sense of optimism about the medium to longer term in all of this. Obviously, the short term, there's still these, these issues, and it remains precarious. As you say it's sort of a stage resumption by AEMO but as you look to the medium term, are you increasingly confident of getting that storage, that transmission that we started talking about in place in sufficient time to have the reliability as well as the emissions reduction?

BOWEN: Yeah, I am Kieran because everybody's raring to go. The private sector is raring to go. I mean, the private sector proponents that I've been interacting with before the election and since the election, just want to-- they're just so keen to get on with it. They're just been waiting for a Federal Government that gets it and provides the framework. So there's all that private sector investment, job creating investment in renewables and storage and transmission just raring to go. They've just been waiting for the change of government to get the policy settings right. States and Territories are raring to go; Labor and Liberal and a Green energy Minister as well, are all raring to go to work with the Commonwealth to get this job done. There's a real sense of optimism around the medium to longer term in the energy market, because finally there's a Federal Government determined to provide one policy framework, to stick to it and to get on with the job and to just get rid of the ridiculous politics of the last 10 years and delay and denying and chopping and changing. That's got to stop. It has stopped on May 21.

GILBERT: The Industry Minister Ed Husic has had a fair crack at the gas producers for failing, failing to deliver enough supply to the manufacturing sector. Husic says that the likes of Shell and Santos he's basically putting them on notice to put enough into domestic supply, or have the government do it for them. Parallel to that we've heard SPC, the food producer warning, this is Robert Giles, the SPC boss saying higher energy prices will force the canned fruit and vegetables company to raise prices again, how close is the Government to taking control of some of that and saying, “Look, we're going to use this trigger. You haven't honoured your social license some of these companies, and we will do it for you.”?

BOWEN: Well, Ed of course is correctly pointing out that there is a social license on the gas producers and that manufacturers have to be remembered in the conversation. So I welcome those comments, because they're very similar to the comments that Madeleine and I have made in recent weeks. Of course, there is a social obligation on gas producers. Now, we've been talking to gas producers and getting them to put more gas into the system and that has occurred when necessary. But also we've said, we would look at reform of the alleged so called trigger, which isn’t a really a trigger, the previous Government’s trigger not really designed for these sorts of circumstances, to be fair, but also would be completely not useful in these circumstances. 

Madeleine and I announced more than a week ago that we would be engaging in a reform process of that. We'll have more to say. Madeleine is engaging in consultation and we'll have more to say about those necessary improvements. But we'll have more to say, on a day after we're ready and not a day before when we've got the policy settings all worked through. 

GILBERT: Is there scope to transform that into a form of east coast reservation? Is there capacity within the way that that's framed, to expand the trigger to a reservation type policy?

BOWEN: Well, Kieran, we're looking at all the options, of course, but a reservation is a forward-looking thing. And one thing we're very clear on is that we respect existing contracts and will not create sovereign risks so they're related. I've seen in the past that we need to look at those sorts of things, when in those days the Liberal Party went berserk and said, “This is an outrageous Government intervention if Bowen has his way to get his hands on all that-- on the gas reservation policy”. So you know, we'll just get on with the job sensibly, carefully and methodically of designing a better policy setting.

GILBERT: Just finally, I know you’ve got to go but the ACCC looking into the energy market, the Prime Minister has said he felt there would have been some gaming of the system. Do you think the competition watchdog will find some of that behaviour going on within the energy sector?

BOWEN: Well, Kieran, what I know is that the Australian Energy Regulator and the ACCC are all over it. I mean, they are, have been looking very closely at all necessary behaviours in the energy sector. They have our full support as they do. So I'm not here to make an announcement as to their findings. That's a matter for them. But they are on the job and Australian consumers can take comfort from the fact that both the energy regulator is probably not well known to many people at home, but the ACCC as well who is better known, have been fully engaged and focused on the task at hand of ensuring that consumers are put first and have done so with the full support of that Albanese Government.

GILBERT: Minister for Energy and Climate Change Chris Bowen. I appreciate your time as always, thank you.

BOWEN: Pleasure KG, good on you.