Interview with Fran Kelly, ABC RN Breakfast
24 February 2020
Subject: Energy, emissions targets, Energy Security Board report, electricity market
FRAN KELLY: Severe weather events and the ageing of coal-fired power plants are making it harder to keep the lights on, with the reliability of the power grid now: “critical pressure”. That's the alarming report card from the Energy Security Board, which comes amid a fresh eruption of the so-called Climate Wars, with the Government accusing the Opposition of being reckless and irresponsible for committing to a net zero target by 2050 without costing the impact on jobs and electricity prices. It also claims that Labor's decision to include agriculture in the plan to cut greenhouse gases will lead to: “A dramatic reduction in the number of Australian cattle”. But Anthony Albanese is playing down the potential eruption.
ANTHONY ALBANESE: If you have a long term plan that is considered, that is measured, which this plan is, backed by 73 countries, backed by the Business Council of Australia, and all those businesses, you can avoid a shock. And that's why you need a long term plan.
[End of excerpt]
FRAN KELLY: Opposition Leader Anthony Albanese, speaking on Insiders yesterday. Well, Angus Taylor is the Minister for Energy and Emissions Reduction, and he joins me in the Parliament House studios. Minister, welcome back to Breakfast.
ANGUS TAYLOR: Thanks for having me, Fran.
FRAN KELLY: According - well, we'll come to the targets in a minute - but according to the report from the Energy Security Board, the electricity system has been stretched to near breaking point over summer. Could we see the grid fail altogether unless there's major new investment in technology and transmission to shore up security and reliability?
ANGUS TAYLOR: Well there clearly are very real risks. We've actually got out of this summer so far reasonably well. There have been some challenges, but we've got out of it reasonably well. But there's no question that it's under pressure, and at the end of the day, if you lose too much dispatchable capacity, that's capacity that's available when you need it, then you put yourself at serious risk. That's the situation we've got ourselves in now. We're seeing enormous investment in the electricity market with almost $10 billion last year in the National Electricity Market. But we need matching investment in dispatchable capacity, most of that comes in solar and wind. We need that matching investment in dispatchable capacity. We are seeing gas generators starting up, with a new gas generator in South Australia, which I was part of opening at the end of last year. Pumped hydro, obviously Snowy 2.0, we're investing almost $1.4 billion in that. That's crucially important. But we've got to get the balance right. We're seeing emissions coming down very fast in the electricity grid. Indeed, they came down 3.2 per cent in the last year, and that's very good news. But we've got to make sure it's resilient as well as the prices we're seeing coming down, and that's good news as well.
FRAN KELLY: I'll come back to the prices. We do need to make it resilient. Basically, what are you going to do about it? The Energy Security Board agrees with you. The rapid uptake of renewables is putting pressure on the system. It wants more hydroelectricity battery storage and gas. Will those energy sources be favoured when you release the technology roadmap?
ANGUS TAYLOR: It's not a matter of favouring technology sources, it's a matter of favouring investments that are going to make sure that our electricity grid is resilient. There's no question that gas, pumped hydro, and to some extent batteries for frequency control, can play an enormously important role. That's why we're investing in Snowy 2.0, Marinus Link-
FRAN KELLY: So is that going to be the backbone of the technology target, emissions target?
ANGUS TAYLOR: We're talking here about resilience of the electricity grid in the short to medium term. Of course central to our technology strategy is the longer term and making sure there's technologies available that allow Australia, and the world, to reduce emissions without imposing impact on jobs and economic growth. So there are multiple objectives here, but the resilience of the electricity grid, which is the question you asked me, is an enormously important part of all of this.
FRAN KELLY: Okay, but what are you doing to get more hydro?
ANGUS TAYLOR: As I said, we've put in place the Retailer Reliability Obligation. We're investing in Snowy and Marinus. We've put in place the Underwriting New Generation program, we've got two gas-fired generators that have been announced as part of that. We're working on pumped hydro in South Australia. So there's a whole series of initiatives, they're all about making sure we've got enough dispatchable generation coming into the system to match what is a record, a world leading investment, in solar and wind.
FRAN KELLY: Okay. You need something more - the Energy Security Board blames government intervention for the problems with the power grid: “Investor behaviour is rated critical reflecting the extent of government intervention”. Isn't that proof that the Big Stick legislation and your scheme to underwrite new generators has distorted the market and is harming investor confidence? That's what the ESB is saying.
ANGUS TAYLOR: Well I disagree.
FRAN KELLY: But that's what they're saying.
ANGUS TAYLOR: Well I'm telling you what the facts are. The facts are-
FRAN KELLY: Well, didn't they look at the facts? Aren't they the experts?
ANGUS TAYLOR: Hang on. Let's look at the facts - $9 billion of investment in the last 12 months in our electricity grid. So there's no shortage of investment.
FRAN KELLY: Well there is a shortage of investment. It's whether it's the right investment.
ANGUS TAYLOR: $9 billion. 6,300 megawatts in a market of just over 50,000. So that's phenomenal growth and phenomenal investment. Now, what we need is a balance in that investment. We need to make sure there's enough dispatchable capacity, as I said a moment ago. That means gas, pumped hydro, batteries for frequency control. And that investment is starting to happen. But the Retailer Reliability Obligation, which we're working on and we put in place in the middle of last year, the Underwriting New Generation Investments program, these are all part of making sure we're getting the right balance and that's crucially important.
FRAN KELLY: Okay. There's a lot to talk about this morning. The Opposition has put its hand up and announced a zero carbon target for 2050. Will the Government follow Labor's lead, plus the lead of all the states, big business and more than 70 other countries?
ANGUS TAYLOR: We're never going to follow a lead of setting a target without a plan that's uncosted and unfunded. And that's what Labor is-
FRAN KELLY: So all these other states, all these other countries, big business, are saying please do it, they're all wrong?
ANGUS TAYLOR: Well, we're at the end of the day the ones that carry the can on this. We're accountable for it. We negotiate the international agreements, and we're not going to enter into an agreement, or a plan, or most importantly, a net zero target that has no plan, that's uncosted and unfunded. Now-
FRAN KELLY: You keep saying that. You keep saying that. But the BCA, okay, estimates that $22 billion will be needed for renewable capacity each year to 2050 to get to zero carbon. Where is the incentive for investment if no one knows the pathway? No one knows the target?
ANGUS TAYLOR: There's been incentive for investment in this country for years without central planning, Fran. Look, there's a lot of-
FRAN KELLY: Are you not listening to business when they say we need an energy policy and we need a target, Minister?
ANGUS TAYLOR: Well, there is a very clear target. We have a 26 per cent emission reduction target for 2030. But let's be clear about this. Let's be clear about this. We will not, and no one in business would set a target without a plan. People in business don't do that. I mean, I spent 20 years in business. You don't set a target without a plan that's uncosted and unfunded.
FRAN KELLY: I had Mike Cannon-Brookes on the program from Atlassian last week. He said they need the target and then the target will give them a framework to work out how to get there.
ANGUS TAYLOR: A lot of people who are asking for a target actually just want subsidies. That's the reality of the matter. What we won't do though, Fran, and this is crucially important, we went through this at the last election. You would have thought Labor would have learnt the lesson. We went through this at the last election where they had a 45 per cent emission reduction target. Bill Shorten couldn't answer questions about what it would cost. He couldn't tell Australians how it was going to be funded. We are not going down that path. Now, Labor is doing it again. They're doing it all over again. It's extraordinary.
FRAN KELLY: You are going to have to come up with a long term target because the whole rest of the world is going to demand it. Net zero by second half of the century was included in the Paris Agreement five years ago. Your Government signed up to Paris. What work has the Government done to estimate the cost of it? The impact on power prices on jobs and living standards? All these things the Prime Minister says he'd need to know. Where are you at with that?
ANGUS TAYLOR: Well at the end of the day, the Paris commitment on net zero is for the second half of the century for a global commitment. Now, that is important.
FRAN KELLY: 1.5 degree limit on emissions.
ANGUS TAYLOR: But the emission target, net zero target was for the second half of the century and it was a global target. Now, we have to do our bit. We have to do our bit. That's why technology is crucially important and it's important because good technology outcomes that allow clean energy alternatives to be put in place at or better than the cost of higher emitting alternatives is how we're going to get emissions down globally, not just in Australia. So if you look at China and India and other developing countries, they will invest in clean low emitting technologies or zero emitting technologies if the economics work-
FRAN KELLY: Sure. No one's arguing with that but we're going to have to have a target, aren't we?
ANGUS TAYLOR: That's why technology is crucial. We have a target.
FRAN KELLY: Yeah. No one's arguing technology isn't crucial. What we're trying to find out is what is Australia's target, long term. Not by 2030, we do know that target. We'll be required to come in November with a longer term target, won't we?
ANGUS TAYLOR: We said by November, we'll have a long term strategy where technology will be the centrepiece and it needs to be the centrepiece because that's how the globe is going to solve this problem.
FRAN KELLY: And we've known that for a long time. What I'm asking you is what work has been done in the intervening years to work out how we're going to get there, what is that going to cost? There must be work going on, and if not, why not?
ANGUS TAYLOR: Of course that work's going on and that's why we're launching our Technology Investment Roadmap process and our long term strategy during the course of this year, Fran. But what we're not going to do is have a target that is unfunded, uncosted and unplanned. And that's what Labor is doing all over again.
FRAN KELLY: But how do you know it's going to be bad for the economy and household budget if you haven't done any costings?
ANGUS TAYLOR: I'll tell you what, if you have technologies where the investment in those technologies is in line with the higher emitting alternatives, then you see reductions in emissions. Now, we're seeing that now.
FRAN KELLY: Sure.
ANGUS TAYLOR: If you look at energy efficiency, Australia is doing extremely well. If you look at land management, we're smashing it. If you look at solar, household solar, almost one in four houses, we're leading the world.
FRAN KELLY: Exactly.
ANGUS TAYLOR: That's because these technologies now are coming into parity, they're coming into line and this is the crucial point, we have to bring technologies into line which don't cost jobs, which don't cost incomes. Labor can't explain-
FRAN KELLY: But Minister, I don't think anyone is arguing with that. What people are saying is isn't it wise to assess what's necessary to save the planet which is zero emissions by a certain point and work from there?
ANGUS TAYLOR: Fran, that's why technology is so crucial now-
FRAN KELLY: Yes. But I'm not arguing that, I'm saying what are you working towards, Minister?
ANGUS TAYLOR: Let me give you an example of what goes wrong.
FRAN KELLY: What are you working towards?
ANGUS TAYLOR: I said we're working towards a long term strategy and we're looking-
FRAN KELLY: Of zero emissions?
ANGUS TAYLOR: And we're working towards technologies that will allow us to bring emissions down without destroying the economy. When you come out with a target when can't even explain what it means for farmers, truck drivers, the transport sector - that's what Labor's doing-
FRAN KELLY: Yeah. But let me quote, Minister-
ANGUS TAYLOR: We're simply not going to go down that path.
FRAN KELLY: Let me quote Innes Willox to you from Australian Industry Group. He said that: “Modelling the impacts of net zero is next to useless, nor should we get too hung up on economic projections which are as reliable as trying in 1990 to estimate the cost and value of smartphones in 2020. The technology will outstrip our expectations and our costings”. Do you accept that though?
ANGUS TAYLOR: Innes is absolutely right that the key here is to get technologies to work. And it's also-
FRAN KELLY: And they're backing net zero emissions by 2050.
ANGUS TAYLOR: It is also critical to avoid smashing sectors in the economy like manufacturing, farming, transport with a target where you can't even explain to the Australian people what the costs are going to be.
FRAN KELLY: Every time I do an interview on this, I get a lot of listeners writing in saying what about the cost of inaction? And they're saying that because of the summer we've had. The economic and social costs of severe events like the fires we just had.
ANGUS TAYLOR: Sure.
FRAN KELLY: Are you factoring that in?
ANGUS TAYLOR: Absolutely. And look-
FRAN KELLY: How? Where?
ANGUS TAYLOR: The point about this is action must be global. There's no point Australia acting unilaterally here and that's why we need to do our bit. We need to do our bit.
FRAN KELLY: Yeah. Which is act.
ANGUS TAYLOR: Now we are doing our bit. We are doing our bit with our 2030 target, with making sure technology's in place that won't just reduce emissions for Australia but will reduce emissions globally. China, India, other developing countries, if they can't, if they can't put in place technologies that ensure they can continue to have strong economic growth without job destruction, they simply won't do it.
FRAN KELLY: You're listening to RN Breakfast. It's is 13 to 8am. Our guest is the Minister for Energy and Emissions Reduction Angus Taylor. Every time we meet there's always too much to discuss. But the latest Greenhouse Gas Inventory shows emissions fell by just 0.3 per cent in the year. It actually found that national emissions, and I'm reading from it now, for the September quarter were unchanged relative to the previous quarter. So we're flat lining.
ANGUS TAYLOR: No. We're coming down and let's-
FRAN KELLY: Well not according to that, unchanged relative to the previous quarter.
ANGUS TAYLOR: Well the last year, they've come down, Fran. But let me give you-
FRAN KELLY: Do you accept what I'm saying to you though?
ANGUS TAYLOR: Let's go a little bit deeper in this because we're also seeing a 3.2 per cent reduction in the electricity grid which is an extraordinary outcome.
FRAN KELLY: In electricity, yes.
ANGUS TAYLOR: We've seen in the domestic economy, over 2 per cent reduction in emissions. Now, the challenge here is our exports have been growing absolutely gangbusters and they have been since we got into Government. We've developed that the world's largest LNG export sector and that's reducing emissions in China, in Japan, in Korea and-
FRAN KELLY: You always argue this.
ANGUS TAYLOR: Well it happens to be right.
FRAN KELLY: But what about our emissions- global emissions? That's what we're going to have to deal with. That's what we are going to have to account to the world for.
ANGUS TAYLOR: Well at the end of the day, what matters here is global emissions you're absolutely right, Fran. The whole point about this is that if we can export gas to countries like Japan and Korea and China and help them to reduce their emissions, which is what's happening, then we should do it now. Now, we pay a price for that and domestic emissions when you take out our exports, we take out our farming exports for instance as well as our LNG exports, domestic emissions are dropping by over 2 per cent. That's a very strong result and at the centre of that is a 3.2 per cent reduction in emissions in the electricity grid.
FRAN KELLY: Yep.
ANGUS TAYLOR: We've talked about the challenges that's creating but it is bringing down emissions at a very rapid pace.
FRAN KELLY: Minister, thank you very much for joining us again on Breakfast. I have a thousand more questions but next time.
ANGUS TAYLOR: Thanks for having me, Fran.