Interview with Leigh Sales, 7.30 program, ABC

Leigh Sales
Energy prices, the Energy Ministers’ meeting, gas supply

LEIGH SALES: Energy Ministers from around the country held talks yesterday to discuss the soaring price of gas. Chris Bowen is the new federal Minister for Energy and Climate Change. Minister, thanks for coming in.

CHRIS BOWEN: Pleasure, Leigh.

LEIGH SALES: You've come up with the start of a national plan this week to tackle the nation's energy needs. Now, I get that things take time to happen, you can't make the effects felt straight away, but lots of people watching would be thinking, is there something you can do right now to ensure that my next power bill is not an absolute nightmare or the next supply shortage doesn't happen?

CHRIS BOWEN: Well look, we have taken some steps as government and as governments, frankly, across the country, last week, for example, the Gas Supply Guarantee was put into place and gas price caps were put in place. They're short-term measures. But ultimately, Leigh, we are paying the price of nine years of policy dysfunction, of delay, denial, stop, start. That's got to end and it is ending. Last night, we had a meeting with the state Energy Ministers with me. It was a material step forward and we all agreed on an integrated national plan to manage the transition. That might sound unremarkable and it should be unremarkable, but it hasn't happened before. And the fact that the ministers came together, Labor, Liberal and Green, all working together with us in the Albanese government, I think just shows that we are getting on with it and there is a lot to do. But the transition to renewables and storage and transmission is even more important than ever before. And this crisis shows what happens when it's mismanaged and important to manage it right. And that's what the new government will do.

LEIGH SALES: So will the transition to renewables in Australia mean cheaper power bills?

CHRIS BOWEN: Yes. Renewable energy is the cheapest form of energy, and that includes when you include and count transmission and storage. It's a myth perpetrated by some on the Right, and I'm disappointed to see it's still being perpetrated by the new Leader of the Opposition that somehow renewable energy is expensive. It is the cheapest form of energy. I'll tell you what the most expensive form of energy is by far; nuclear. And it just strikes me as extraordinary that some people still in 2022 think the answer to high power bills is to introduce the most expensive form of energy. But the cheapest form of energy, including with storage and transmission, is far and away renewable energy.

LEIGH SALES: I suppose you've got, though, the balance between reliability, how much it costs, ease, safety, all of those different factors that you've got to balance?

CHRIS BOWEN: Of course. Absolutely. And again, this crisis shows what happens when it's not managed and not balanced. So we need to ensure we have reliability in the system. That's why a new capacity mechanism, I don't want to get too nerdy for the viewers, but a new capacity mechanism to ensure we have extra energy capacity in the system as we transition to renewables is important. And the Energy Ministers agreed with me last night to fast track that and get that done. That's important. All this is important. We need a massive investment in our transmission grid. That's what our Rewiring the Nation policy does. We need 10,000 kilometres of new transmission lines as we move to renewable energy. We need much more storage because deniers and cynics say the sun doesn't always shine and the wind doesn't always blow. Well, the rain doesn't always fall either, but we manage to store water. We can store renewable energy.

LEIGH SALES: On the point about storage, one of the parts of your plan is to buy and store more gas in Australia to make up for when there are shortfalls, as you say. How soon do you think a system like that could be up and running?

CHRIS BOWEN: So Ministers last night endorsed that. It's a joint Federal/State initiative. We endorse that unanimously. That's a material step forward. Again, it hasn't happened before. Many people might have thought we already have the power to do that. We'll take a bit of time to work through it's what's technically called a rule change to allow AEMO, our market operator to do that.

LEIGH SALES: But it's like one-year thing or 10-year thing?

CHRIS BOWEN: Oh, no, it's a month thing, not a years thing. It'll take a bit of time to get it all through, but I think it's pretty important. That would have been very handy last week to have a supply of gas that the operator could say, well, we got a shortage, let's release that into the market.

LEIGH SALES: Is there enough gas that Australia produces reserved here in Australia?

CHRIS BOWEN: Well, we don't have reserve as such, apart from Western Australia, as a country. We do produce a lot of gas and a lot of it is exported. And, of course, there's a debate about that. There is a very blunt instrument at the national level called the Australian Domestic Gas Security Mechanism that the previous government set up. It's very difficult to use. It couldn't be applied today. It wouldn't even come into force until 1 January. So we have today announced formally that we will look to reform that and make improvements to that, to make it more meaningful and more powerful. My friend and colleague, Madeleine King, will, as Resources Minister, will look at the reform options to try and make that trigger, to make it a real trigger, because at the moment, it's not.

LEIGH SALES: So on that point, just to be clear what it is, what I wanted to ask was, we export a lot of gas, so in those contracts, is what you're talking about, does it relate to this? I wanted to know if we're running short domestically, is there a provision in those contracts where you can say, "hang on, we're trashing that because we have to meet our domestic needs first"?

CHRIS BOWEN: Well, those contracts are private and the mechanism is about un-contracted gas by and large. And you do have to be careful about sovereign risk and you can't create sovereign risk. That's a challenge. But Madeleine will work those issues through as she looks at reform. But at the moment -

LEIGH SALES: Sure, but Australians would feel like, well, we produce our gas, how can we be short of gas if we're exporting gas?

CHRIS BOWEN: And they'd be right, and they'd be right. And I make the point, we are not interested in demonising gas companies. We're all doing our best for Australia, so we're not going to go down that road. But what we are going to do is say there's a social licence. And I've said this directly as Madeleine has to gas companies and gas chief executives. We've got a crisis on our hands, guys, we need to respond. At the height of the crisis last week, the gas pipeline from Queensland to Sydney was full. You couldn't have put more gas in it. Some people were saying "oh just get on the phone to the gas companies and get more gas". They really showed they didn't know what they were talking about because the pipeline was full. So the system, the private sector and government did respond. But Australians are right to say we should have the expectation that at least some of that gas is used in a situation like this. So Madeleine will look at those reform options because the instrument that we have at our disposal, we've inherited, is pretty blunt.

LEIGH SALES: So over winter, do Australians need to be braced for gas shortages, power shortages?

CHRIS BOWEN: Well, AEMO has advised Energy Ministers at the moment that the system is stable, but there will always be things to manage. I mean, we do face a very serious issue. It has been at points over the past week at a crisis levels. We've responded very quickly, all the regulators. I've been, since being sworn in just a week ago, seems like longer, I'm sure people would understand, but just a week ago been on the phone constantly to state and territory Energy Ministers, managing this with the energy companies, and we have avoided that. And I think the regulators, working with government, will work very, very hard to avoid anything like that.

LEIGH SALES: Minister thanks for your time.

CHRIS BOWEN: Leigh, this might be our last interview, but just on behalf of all of us, thank you. You've had a stellar innings here at 730. And thank you for holding us to account on behalf of everybody out there you've been providing great service to Australians, and I'm sure you've got much more to do.

LEIGH SALES: That is very kind of you. Thank you very much.