Interview with Tom Connell, AM Agenda, Sky News
Tom Connell: Joining me live is Assistant Minister for Industry, Energy and Emissions Reduction, Tim Wilson. Thanks for your time.
Tim Wilson: Thanks for having me, Tom.
Tom Connell: So before we get into the detail, the modelling matters, we've been told it will be released eventually. Does that mean before the election?
Tim Wilson: Well, the Prime Minister's outline that will be released before the next budget now and then he knows when, of course, the election is. But you know, the modelling just backs up the plan. We have a 130 page plan which actually takes Australians step by step through how
Tom Connell: I want to go through all of that. Sure. But before the election campaign would be important to have that because otherwise it gets lost in the maelstrom.
Tim Wilson: Well, I don't think we want anything to be lost in the maelstrom. One of the things we've done is been very transparent with our plan about not just setting a target, not just the timeframe that we're going to meet that target of Net Zero by 2050. But critically that then we've gone through with a detailed plan about how we're going to go through each step, the viability of technologies to achieve it, the time frames the cost schedules of getting there. And that's why we've taken this approach. And I mean, frankly, you know, we look at other political parties like Labor Party. They have a target, no plan that didn't have a 2030 target.
Tom Connell: And we'll see what's to come on theirs.
Tim Wilson: A plan matters
Tom Connell: Well, of course it does. But they needed to see what would happen in Glasgow and so on. We'll we'll talk about their plan. I'm sure we will. Let's talk about you. Big assumptions on technology, in particular on CCS. So carbon capture and storage and green hydrogen, if they're not as effective as we hope, if they don't take the leaps that we hope, will you spend more money or not get to Net Zero?
Tim Wilson: What we're banking on is these technologies to deliver consistent with what other countries are doing. These aren't things that we're just kind of plucked out of the air. The Intergovernmental Panel on Climate Change in its scenarios has included realistic assumptions about these technologies coming online. But then to be cost competitive, the International Energy Agency and its pathways to Net Zero has done exactly the same thing. So we're very optimistic about where they can go.
Tom Connell: And if so, what if they don't?
Tim Wilson: Well, you know, that's a projection. We know one of the things that's been...
Tom Connell: But I guess the point is, is there a Plan B if it doesn't deliver what you hope it does? Do you spend more money to make sure we get to Net Zero? Or do we fall short of Net Zero?
Tim Wilson: Well, what we're focused on, Tom, is a portfolio response that manages risk. We look at what's happening in Europe right now, where energy prices are going in the roof through the roof because they are a bit on just a small number of technologies as part of their solution. And so, of course, some technologies might move faster. Some might move a bit slower, some are going to come online faster than we expect in others, and that's why we're taking a risk management approach and a portfolio approach. So the role of those different technologies could change and the degree that they use could change based on their speed. But we're optimistic, though, about that is they're going to come online, that we're going to be able to adopt them at a cost competitive basis. And frankly, that's what other countries are going to need to do to cut their greenhouse gas emissions so they can follow our lead and be part of a solution.
Tom Connell: One of the confident reasons for the Government saying we'll get there was renewable energy. We've been a world leader in renewable energy. That's because we've had big subsidies for rooftop solar in this country and we've mandated targets for providers. These types of approaches are being ruled out in the next part of that plan why?
Tim Wilson: Well, that was why go back to the original renewable energy target and that was actually introduced by the Howard government. And the reason they stayed up
Tom Connell: The Abbott Government tried to rein it right back.
Tim Wilson: Well, let's go to the. Let me ask the question politely, Tom, which is it was introduced originally because it was how do we get this industry going and make it viable and competitive? Now what Labor did was say, we're going to bet all money on black. They took the non risk management approach and put everything on black. Well, what we saw was a huge boost of renewable energy, but we're going to take a risk based approach.
Tom Connell: Hang on, you said a huge boost to renewable energy. You're boasting about that huge boost and saying it was a bad bet that Labor made.
Tim Wilson: I said they put everything on black. We're taking a risk management approach. And one of the key pillars of what we announced yesterday was a plan for ultra low cost solar because it no longer needs a subsidy. Even the Labor Party acknowledges that when Anthony Albanese has been asked on programs like 7.30 on the ABC, he said these no longer require carbon carbon taxes to support them.
Tom Connell: These are not carbon taxes, but it's about what other incentives you need to put into the system to make sure their used.
Tim Wilson: That's why we have things like the Climate Solutions Fund, the Emissions Reduction Fund, which...
Tom Connell: Let me talk about that said, the Emissions Reduction Fund within that is a safeguard mechanism. This is what sets the limit for hundreds of our biggest emitters, how much they can emit often each year, sometimes it's multi-year, let's say how much they can emit each year. That's the only thing to stop them undermining the rest of our reduction. So if these big emitters don't actually bring down their emissions under the safeguard mechanism, will you look at tightening it?
Tim Wilson: What the safeguard mechanism does is create a direct incentive for them to use technology to actually achieve their target.
Tom Connell: Except it's too high, right now.
Tim Wilson: Well, I don't think it is too high right now because a lot of the focus of people claiming it's too high is because they want to, broaden it out to include many other businesses often that are very difficult to offset their emissions. And we'll start to include things like farmers where yes, we have technological approaches around soil carbon and how we can use the enrichment of our soils to sequester carbon, improve, get better outcomes for our farmers. But we're not going to do it where it acts as a tax and an economy-wide tax.
Tom Connell: But it's set so high right now that if we're talking about Net Zero, if it's kept at that level, it's way too high for us to achieve Net Zero for all these big emitters. That's true isn't? It has to come down eventually.
Tim Wilson: It is if you only look at it through the only policy, but that's not the only policy. As I said, we're taking a portfolio approach and that's why we have the first economy wide plan to get Australia to Net Zero by 2050 that was released yesterday.
Tom Connell: But you can have all these parts of the economy reducing emissions and the big emitters, they've got this very high cap. Still, if they don't opt to bring their emissions down because it won't be compulsory, then overall our emissions just don't come down enough.
Tim Wilson: But they'll have the incentive driven by changing market demand. There is a demand in the global economy for lower emissions output and products and services. But in addition to that, under the safeguard mechanism, they do have incentives to invest in technology, and these companies are already starting quite openly. As you've raised with me previously, that they've set their own targets, their own ambitions about how to reduce their emissions. So the difference between Labor's plan, which is very much focused on taxes, is ours is how do we create incentives, get business, industry households, Government all working together.
Tom Connell: So this will just be markets and companies doing the right thing? What if they don't, if we have big emitters not bringing down emissions and that's undermining the overall reduction in emissions? Will you look at the safeguard mechanism?
Tim Wilson: Well, what we're looking at is how we can utilise technology to make sure that it does work....
Tom Connell: And that's fine. But what I'm saying does what I'm saying about a safeguard mechanism because it's set so high. Means, some companies let's say you've got industrial company and it doesn't want to pay for CCS. It doesn't want to pay for permits. Offset permits and its emissions are staying very high and it means we're not hitting targets. Would you then look at the safeguard mechanism and tightening it?
Tim Wilson: Well, I know, you know, the Labor Party and other others want a an economy wide carbon tax. That is not our approach.
Tom Connell: There is a difference between a tax and a price on something that's not just the Labor Party it's a lot of economists.
Tim Wilson: We know that well, we know that there are a lot of economists who like things in theory, but not in practice. And they've long advocated for things like carbon tax and emissions trading schemes because the bigger the artifice, the more they can control it. Our approach has been at every point. How do we use technology...
Tom Connell: You brought in the safeguard mechanism? I'm just asking how you'll use it?
Tim Wilson: Well, exactly as it's being used now...
Tom Connell: But there is a review on it. So I'm just asking, would it ever be tightened?
Tim Wilson: Well, I want to prejudge any review, but the critical thing is we've always said we want to use technology to be the solution. You just look at. The reductions in the cost of solar year on year.
Tom Connell: Technology is great it's also making sure companies adopt it, at this industrial company could use CCS, but if there is no incentive to, then it might not. That's the point. It's whether you make a company take up or try to encourage them to take up the technology.
Tim Wilson: But we already know there are incentives for companies to take up these pathways that reduce their greenhouse gas emissions. Yes, but they also reduce their electricity consumption. One of the reasons we don't...
Tom Connell: You don't do that through CCS what I'm talking about it's not just electricity consumption when there's an industrial company that can't reduce it, but they have to sort of add something on like CCS that costs money, it costs them.
Tim Wilson: Everything can involve costing money if you're going to make investments for the future. I mean, companies do that all the time if they want to...
Tom Connell: But this is an investment to only reduce emissions. That's the only point.
Tim Wilson: But if you only look at through the prism of just reducing emissions, you're missing a bigger story. One of the reasons we've been able to increase our projections on our 2030 targets has been because of energy efficiency, which has meant that households and businesses have consumed less energy and become more efficient. When I went to study carbon accounting many years ago, the thing that became really obvious to me was you can have all these taxes if you want. But actually, there are plenty of ways when companies audit their own business practices, they reduce their emissions footprint, they reduce their costs directly as a consequence of becoming more efficient. And we want efficient, competitive companies
Tom Connell: With that big leap forward in CCS. Do you think it's fair to say thermal coal will cease to be used around the world?
Tim Wilson: I'm not going to make a projection about what's happening in other countries. Tom, what I do think...
Tom Connell: But thermal coal's only future is with a much better CCS?
Tim Wilson: Well, what we've said is we want to offset any emissions directly associated with, you know, the extraction of coal. We want to make sure that we're part of the solution and what other countries invest in terms of their energy generation is ultimately up to them. And it's not like we're the only ones who have these mineral deposits in the world. We know that China has its own coal so they can stop buying from us. They just buy nastier, dirtier coal domestically. And this has always been one of the great challenges is the substitution is real.
Tom Connell: Tim Wilson, congratulations on the new portfolio, by the way. I'm sure we'll talk about it again soon.
Tim Wilson: Thanks Tom, go dees!