Joint media conference with Minister for Climate Change and Energy Chris Bowen

media conference
Energy and resources markets, Energy Ministers meeting, Australian Domestic Gas Security Mechanism

Joint media conference with Minister for Climate Change and Energy the Hon Chris Bowen MP

CHRIS BOWEN: Of course, my friend and colleague Madeleine King will give you an update on the situation in relation to the various levers in relation to gas supply. As you know, last night, the country's Energy Ministers, state and territory, met with me. It was a good meeting. A 2-hour meeting where we made real progress. Material steps. I think that people understand that a decade of delay and denial is not fixed in one meeting and there is no silver bullet. But I am very pleased with the progress that we've made and we will continue to make, and I do want to again place on record my thanks to the state and territory Ministers, Labor, Liberal and Green. All three parties were represented at the table last night and to have a unanimously endorsed communique at the end, I think, shows just how well under the Albanese Labor Government, states and territories are working with the Commonwealth.

Of course, we agreed to around 11 things, but most importantly from my point of view, working now to give AEMO the power to buy and store gas so that it is kept for a crisis situation and can be released at AEMO's discretion I think is something that would have been useful in recent times, and something that will be useful in coming times. Secondly, the state and territory Ministers agreeing with me to progress the capacity mechanism process. The previous government had said that they would work towards it coming into place in 2025. We need to do better than that. But we also need to make sure that we get it right, and that includes ensuring that it supports new technologies, renewable energy and storage. And that is the instructions that Ministers gave last night. As I've said, I am encouraging the Energy Security Board to expedite their work and get it out for further consultation as soon as possible. There will be a lot of detailed work for people to see. There’s been a lot of work done by the Energy Security Board, and I look forward to seeing their work being made public in the coming days.

And, finally, over the longer term, the country has an Integrated Systems Plan, which is great for energy and electricity transmission, but that’s what it does. I put to Ministers that we needed an integrated plan, an agreement to build entire transmission, with infrastructure that supports green hydrogen going forward, with infrastructure that supports storage as well as transmission. And I’m very pleased that Ministers agreed to do that – that we will have an integrated agreement on the entire transition underway across the country. It’s going to be a big piece of work. We’ll take the work that’s been done on the ISP and build on it, so it becomes not just an electricity document, but a plan for the whole country for the transformation to underpin the new government’s policies of getting to 82 per cent renewables by 2030, to assist in rewiring the nation in a very wholistic way. So, it was good progress last night. As I said, every step is important. No easy fixes but making good progress and dealing with nine years of denial and delay that we have inherited.

One of the things that Ministers did touch on last night is the gas mechanism and how it works. Of course, the Ministers dealt with matters of joint State–Federal responsibility. The gas mechanism is a Commonwealth responsibility, but we have been providing comments on that about what a blunt instrument it is. It’s not really a trigger. It’s a very complicated mechanism, and my friend and colleague Madeleine King, who’s been working very closely with me over recent – I was going to say weeks, but it’s actually only been a week since we were sworn in – over recent days that we’ve been dealing with this crisis will have an update for you on that matter.

MADELEINE KING: Thanks so much, Chris. As many would know, the Australian Domestic Gas Security Mechanism is due to expire on 1 January next year. The former government, the Coalition Government, left us with a mechanism that is at its end. We have resolved today as a Cabinet to make sure that mechanism remains a tool of government to ensure future supplies of gas in this country, and so we will move as quickly as possible to make sure that gas security mechanism for domestic supply is renewed as soon as possible through regulation.

At the same time, we will be conducting an urgent review of the domestic gas security mechanism to make it actually work. As Minister Bowen has pointed out, right now, it’s a long and complicated, convoluted, ineffective mechanism that takes a very long time for it to produce results. We are determined to change that, and we’re determined to make sure that this mechanism, as well as the other tools available to us, are all on the table so that we can ensure gas supplies are appropriate, adequate and affordable for Australians right across the country.

We will also, and the Cabinet has also agreed, to start pretty much as soon as possible to renegotiate the heads of agreement between the gas companies and the Prime Minister, who signed it, and this government to make sure that that remains on foot also as a tool of government, but it will have a distinctive edge to it brought upon by this government’s urgent and very measured response to the gas crisis. We need to have this heads of agreement renewed so that we can again, along with the domestic gas security mechanism, ensure that there are gas supplies that are affordable, adequate for southern Australian states. Thank you.

CHRIS BOWEN: Thanks very much, Madeleine. We’ll go to the room first, and I know we’ve got some journalist colleagues on the phones. I’ll take those questions after I’ve gone to the room in the first instance.

JOURNALIST: Can you please outline precisely what the Energy Ministers agreed to yesterday in regards to the capacity mechanisms; specifically what is eligible for perceived capacity?

CHRIS BOWEN: What we agreed is that we need one, and what we agreed is that it should be done at pace and expedited, and what we agreed is that it must encourage new investment in new technologies, and I’m thinking particularly of storage and renewables. Now, how that is achieved is something we’ve tasked the Energy Security Board to do more work on, and they will release that work in the coming period. Now, there’s a number of ways that you could achieve that. I’ve got a lot of confidence in the Energy Security Board. But, quite rightly, I mean, I could write the capacity mechanism, but the Energy Security Board are the right people to do it with the skills that they have, the consultation they’ve had. They have got instructions from Ministers about what they want it to achieve a principles based approach, if you like, and how they think that’s best reflected they’ll put out for consultation shortly.

JOURNALIST: Would you consider cash payments for those in dire straits due to soaring energy bills?

CHRIS BOWEN: Well, look, the Treasurer has pointed out, for example, that we went to the election with a considerable cost of living relief package, which he will be starting to implement in the October Budget. Of course, we said we’ll sensibly look at anything else we can do, but we’ll be concentrating on that cost of living relief that we went to the election with. Peter.

JOURNALIST: Can I just check, with the storage of gas, my understanding is it’s only going to apply for New South Wales and Victoria; is that right?

CHRIS BOWEN: No, I won’t talk about where it’s stored but it will be stored, obviously, in a physical location in the south eastern states, but if you put more gas into the east coast market, it takes pressure off anywhere.

JOURNALIST: Can you give us an indication of what kind of money will be set aside to purchase this gas and who’s going to contribute?

CHRIS BOWEN: Well, AEMO will undertake any purchasing and, of course, they work, generally speaking, on a cost recovery basis.

JOURNALIST: Do gas users need to accept that they will face higher prices in the short term, and they just need to wear the cost of that?

CHRIS BOWEN: Well, there’s a lot of pressure on the gas market. Now, I think it depends who you’re talking about, whether you’re talking about big industrial users. They have longer term contracts. Spot price doesn’t impact on them immediately so much. For people who are buying gas on a shorter term basis there’s already big impacts, and eventually those impacts flow through to everyone. Even those people on a longer term contract, the spot price eventually gets reflected in their contract. So, yes there’s a lot of pressure on gas and gas prices, but governments across the board are working very hard to try and ameliorate and manage the crisis that we are inherently, inevitably dealing with, which is a result of a lot of years of policy dysfunction.

JOURNALIST: Do you have any response to the Coalition’s push for Labor to explore nuclear energy?

CHRIS BOWEN: Seriously. A couple of points. Nine years in office and they’re coming up with bright ideas on the other side of the election? Point 1: no credibility. Point 2: nuclear is the most expensive form of energy. We have a cost of living crisis, energy prices going through the roof and what’s their big, bright idea? They say, “Let’s have the most expensive form of energy we can possibly think of. Let’s come up with the most expensive form of energy and let’s put that in the system because that’s going to make power prices cheaper.” They want that debate? They really want to argue that? Bring it on. It’s just a complete joke. Peter.

JOURNALIST: Mr Bowen, again about the timing for the gas storage. AEMO is being tasked to go and research this. How soon could this storage be available and is it feasible, for instance, in 2022?

CHRIS BOWEN: We’ll work that through with AEMO. There’s a process. Ministers have agreed, so it’s endorsed, but now there’s a process for rule making. I would like to see that happen as expeditiously as possible. I’m sure AEMO will make its preparations, waiting for the rule making. So, as you imagine, Peter, we met last night; there’s some issues that need to be worked through, but, you know, we want it to happen as expeditiously as is prudent and is possible. But there is a little bit of a process to go.

JOURNALIST: I’d like to ask Minister King a question. With the gas trigger, you are going to review it, but I understand you could change the rules really at any time. If you are going to review it, is it with an eye to being able to bring forward the activation time to sometime this year?

MADELEINE KING: Nothing’s off the table in regards to the secure gas mechanism so we’ll consider all options. We’ll do it as a matter of urgency so there are options available to the government to make sure there is adequate supply.

JOURNALIST: For the review time, when do you expect to have that back?

MADELEINE KING: It’s a matter of urgency. Weeks, we hope.

CHRIS BOWEN: If it’s all right with you guys, we might go to colleagues on the phone. I think we have Eliza on the phone.

JOURNALIST: Minister –

CHRIS BOWEN: Oh, that’s not Eliza. It’s Chris Uhlmann on Eliza’s phone. All right.

JOURNALIST: [Indistinct], but if not, where would you get the 12,500 megawatts of generation that it produces at the moment?

CHRIS BOWEN: Chris, I already answered that question earlier in the press conference about whether coal and gas will be in. I’ve indicated the principles the Ministers endorsed for the capacity mechanism. We look forward to seeing the detailed work from the Energy Security Board about how they achieve the objective of the capacity mechanism being implemented in a way which encourages and supports investment in new technology.

JOURNALIST: Sure. But can it be achieved in that time frame without having coal in it?

CHRIS BOWEN: Ministers have been very clear about the urgency and the principles that will be applied, Chris, so it’s reflected in the communique.

JOURNALIST: Are you leaving it up to the Energy Security Board to come back and say coal and gas need to be part of it? Are you outsourcing the question to them?

CHRIS BOWEN: No, ultimately it's a decision for Ministers to endorse, but what I am requiring, requesting, asking, the Energy Security Board to do is to announce – is to release another consultation draft of what they see the capacity mechanism looking for – looking like. That’s appropriate. They’ve done a lot of work on it, and I support experts doing good work.

JOURNALIST: When will that come back?

CHRIS BOWEN: It will be out very shortly. Any other questions?

JOURNALIST: [Indistinct].

CHRIS BOWEN: Well, I’ve asked the Energy Security Board to do it urgently. I would hope in coming days or a week or so.

JOURNALIST: How is the AEMO if we were asked about how quickly that could be enacted, but it’s not likely to have an impact this coming winter.

CHRIS BOWEN: Well, we’re not going to be able to purchase and store gas overnight. That is true. And, of course, there’s some rule-making changes. But if we had this capacity last week, it would have helped. If as Minister and AEMO had this last week – this crisis started to break on Tuesday and Wednesday, we were sworn in on Wednesday. Here we are, Wednesday night a week later, endorsing the rule change. You know, if the Liberal Party or others are saying this isn’t happening quick enough, I mean, the Liberal Party is like the rock band that trashes the hotel room and then complains it’s not cleaned up before breakfast. They created the mess and the new government is fixing the mess. Are we going back to the room. Peter?

JOURNALIST: Just in terms of the capacity –

CHRIS BOWEN: Sorry, Phil, I didn’t know you were on the line. I’ll take Peter Hannam and then I’ll take you.

JOURNALIST: On the capacity mechanism, several of the States and Territories have indicated previously they would be opposed to coal and gas. So far, it seems like you’re looking at a collaborative national approach to these issues. If you do get the ESB coming back with the suggestion of coal should be a part of that or even gas, how are you going to convince these other states to come along?

CHRIS BOWEN: I think, with respect, Peter, I don’t mean to be critical – I don’t mean this as a criticism of you, but you’re getting a bit ahead of yourself. I will say there was a real spirit of cooperation around the room last night, a spirit which I tried to foster and State and Territory Ministers responded to very, very warmly. We are all Energy Ministers doing a job in a difficult circumstance, whether you’re a Liberal State Minister or a Labor Federal Minister or a Labor State Minister or a Greens Territory Minister, of which we had one at the table, all doing –


CHRIS BOWEN: Yep, I’ll be with you in a minute, Phil. Don’t take any other calls, Phil.

We’re all doing a job and all working cooperatively, and that spirit of cooperation will continue as we discuss the detailed work of the ESB.

Phil Coorey, are you still with us? Further question?

JOURNALIST: Yeah, bad line. Can you hear me?

CHRIS BOWEN: I can hear you just fine. So can the room.

JOURNALIST: To Minister King, will you look at with the shakeup of the gas trigger substituting price for supply as the catalyst to pull the trigger?

MADELEINE KING: Thanks for that. As I said before, everything’s on the table. We’ll rule nothing out. We’ll be consulting widely, as one would expect, and urgently, of course. We need to resolve this situation so that a future crisis can be addressed in a more timely manner than the mechanism we’ve been left with, but we will consider everything. Okay?

JOURNALIST: As a follow up, are you worried about putting noses out of joint in the gas industry?

MADELEINE KING: No, I’m not worried about putting anyone’s noses out of joint. My priority is to make sure there’s affordable and adequate supply of gas for the southern states of Australia.

CHRIS BOWEN: Okay, guys. Thank you.