Address at Smart Energy Council Conference, Sydney

CHRIS BOWEN: Thank you, Peter. Thank you, Aunty Joan, for the welcome to Country. And, of course, I join in acknowledging the Gadigal people and pay my respects to their Elders past, present and emerging. And it’s important as these acts of acknowledgement are, the most important act of recognition will occur later this year across our country.

New Zealand, of course, reached a constitutional settlement with their first peoples in 1840 and enshrined representation to parliament in 1867. Canada recognised their first peoples in their constitution in 1982. Both have been functioning democracies and thriving democracies since then. I’m very confident that 2023 will be Australia’s year to finally recognise our First Peoples in our most important governing document and enshrine a voice for them to their parliament and their government.

Well, friends, when I addressed this conference last year we were right in the middle of an election campaign. The now Prime Minister was with me. We came to reinforce our commitment to Powering the Nation, a policy we’d released six months earlier. In my remarks last year I spoke about our intention to notify the UNFCCC of our new climate targets and to legislate them. We’ve done both of those things. Legislation was important because it sent the signal to renewable investors in Australia and across the world that the government had changed, the parliament had changed, the country had changed and Australia was providing a stable and welcoming environment for investment in renewable energy. It was important we passed the Climate Change Act through the parliament, and we did so. It’s played no small part in the 55 per cent increase in large-scale renewable investment that occurred last year, the vast bulk of which occurred after the May election.

Senator Pocock is here – I want to acknowledge him and his support for the Climate Change Act and the other things that we’ve passed through the parliament as well as the crossbench in the House and in the Senate.

When I was here I talked about our plans to increase renewable energy to 82 per cent of our energy grid by 2030, and I said we’d do so primarily in the first instance by Rewiring the Nation. Since then we’ve committed the money in the Budget – the $20 billion of funding – to Rewiring the Nation, and we’ve got away deals with New South Wales, Victoria and Tasmania. Importantly, for investments in transmission across those states and to link those states –New South Wales, Victoria and of course Tasmania – in the very important Marinus Link, which will see Tasmania grow from 100 per cent renewables to 200 per cent renewables. When I was here I talked about our plans to encourage electric vehicle sales by passing the electric vehicle tax cut through the parliament. We’ve done that as well. And that’s played no small part in the increase in electric vehicle sales from 2 per cent when we came to office to 7 per cent.

These are the sorts of things that I talked about when I came last year. I talked about our plans to release a National Electric Vehicle Strategy and, of course, we did that several weeks ago and committed to the development of Fuel Efficiency Standards – a reform which is way overdue in our country and will see Australia no longer be one of two developed countries without fuel efficiency standards – Australia and Russia – but will actually have fuel efficiency standards.

And, of course, last year I talked about our plans to reform the Safeguard Mechanism to ensure that our biggest emitters are reducing emissions. I talked about the need to reform the Safeguard Mechanism to make it actually work to bring emissions down and, of course, a few weeks ago we passed that through the parliament as well.

And in addition to what I talked about and in addition to what I said we would do in the election campaign in Powering the Nation, we’ve also worked with the states to ensure that emissions reduction becomes a national energy objective – again, a way overdue reform which has been ticked and done. We’ve worked with the states and territories to develop a congestion management reform and in the last meeting we agreed that amongst states and territories – and I acknowledge the leadership of the Smart Energy Council in leading that debate and I acknowledge the Smart Energy Council’s leadership across the board, particularly your leadership, John, in the very important role you’ve played in our national debate and to working with us to encourage states and territories to reach that agreement.

And, of course, perhaps most importantly of all we’ve agreed with the states and territories on the capacity investment mechanism. Rewiring the Nation is important for moving our energy grade to 82 per cent, but it’s not enough. The capacity investment mechanism is key to providing that stable and certain environment for investment in dispatchable renewable energy.

Now, the Smart Energy Council has been calling for a storage target. The capacity investment mechanism is, in effect, a storage target. By insisting that investments under the capacity investment scheme will be both renewable and dispatchable – it can’t be one or the other, you’ve got to be both – we are ensuring that the investment occurs in the storage which is so necessary as well as the renewable energy investments. And there’ll be more in the Budget about the capacity investment mechanism.

I’m pleased to have had very productive conversations with state ministers who will be first cabs off the rank in terms of the rollout of the capacity investment mechanism. As you know, it will be conducted jurisdiction by jurisdiction. And later this year we’ll be beginning with the first auctions under the capacity investment mechanism. We’ve agreed with the states involved as to which they’ll be and how it will work. I look forward to providing further updates, and there will be important measures in the Budget to support that as well. Absolutely essential - unlocking billions of dollars of renewable energy investment and unlocking gigawatts of power.

But, friends, while we’ve done I think it’s fair to say a lot in our first almost 12 months, if you’d said to me 12 months ago when I was here you’ll get the Paris notified, you’ll get the climate change bill passed, you’ll get your electric vehicle tax passed, you’ll release the national electric vehicle strategy, you’ll pass the safeguard mechanism through the parliament, you’ll agree with the states the capacity mechanism, you’ll agree with the states to add emissions reduction to the national energy objective, you’ll agree with the states for congestion management, if you’d said we’d do all that, I’d take it as a reasonable degree of progress and achievement. And I’m pleased with what we’ve done in our first 12 months.

My main message to you today, though, is we are just getting started. There is so much more to do. I’m pleased with what we’ve done in the first 12 months, but I am far from satisfied because the task is so big and the ambitions for our nation are so big. And while the challenges are real – and I’ll talk in a moment about some of those challenges – the opportunities for our country are just so enormous, as every one of you in this room knows and as every one of you are exhibiting outside.

We have more petajoules of sunlight that hits our land mass than any other country in the world. Our wind resources are above average, and I’m also pleased with the progress we’ve made on offshore wind. I’m pleased that we’ve declared – I’ve declared the Gippsland zone. The Hunter zone has closed for consultation; I’ll have more to say about that in coming weeks. The applications for feasibility licences for Gippsland have closed and there will be more progress on that in the next few months. These are all important things, but there’s so much more to do.

You know that to achieve our 82 per cent renewable energy target and our 43 per cent emissions reduction target, you understand the size of the task we have. We have to put 60 million solar panels on roofs – again. We’ve done that in the last 10 years, we need to do it again in the next seven. We need to build the storage to accompany that. We need to build around 40 wind turbines a month to get this job done. These are the sorts of tasks – and that’s just electricity before we turn to moving electric vehicle sales, as I said, from 2 per cent to 7 per cent to get them much higher, getting real industrial emissions down and all the rest.

There is so much more to do. But I know we will do it because we have such good partners. We have a federal government determined to do it, and that is the essential starting point. It’s not enough, though. We need partners in the states and territories. We have those. I’m delighted with the degree of support and cooperation I get with every single state and territory energy minister and our climate ministers being invited to join our ministerial council as well, which has already occurred.

I’m delighted with the support we get from the private sector. I’m delighted with the leadership of the Smart Energy Council and so many other organisations. We have to be all in to get this done – not a whole-of-government effort, not a whole-of-government’s effort but a whole-of-society effort. And I believe has a country we are all in. I believe those elements of the parliament that have opposed this agenda and continue to oppose it are becoming increasingly irrelevant and increasingly isolated.

But, of course, we do and will face challenges. It would be churlish to deny that. And we have another one that we are talking about today. When we came to government my incoming minister’s brief told me that Snowy 2.0 was running at least 12 months late. It was the first I’d heard of that, which is not an ideal circumstance for an incoming minister to read it for the first time in their incoming minister’s brief. We all should have known that. AEMO should have known that. You should have known that. The states and territories should have known that. The only people who knew it were Snowy and Angus Taylor. It was hidden from the Australian people.

The fact that these delays were hidden was inexcusable. AEMO hadn’t been informed, which is a very real failure because it, as you know, relies on the timely and accurate information to keep the lights on. Now, I welcome, however, the new approach by the new Snowy CEO, Dennis Barnes, in taking a much more transparent approach. Today he has announced that Snowy 2.0 faces further delays and possible cost increases and that Snowy will now work with their partners to analyse these impacts and reset the project.

The impacts are for reasons we all well understand. This is a very large and complicated engineering project and there are supply chain consequences for every construction project across the world at the moment from the overhang of the Covid-19 pandemic. But I support Snowy being honest and transparent with us and with the AEMO and with state and territories and the public.

Earlier this week I was at Snowy 2.0 and I spent two days, the last two days at Snowy 2.0. In many ways progress has been really substantially made. I stood around a kilometre underground near the spot where a 2 gigawatt power station will be built, as much capacity as Liddell had in its prime. I met with the workers – more than a thousand workers – across the entire site who brought the project this far, and with the right leadership and support I’m confident they will get the job done.

This job is crucial for our energy future. Snowy 2.0 will provide enough renewable energy and storage to power 3 million homes for a week. So we’ll continue to work very closely with Dennis Barnes and the team at Snowy to ensure that this project is delivered. But, again, I was informed yesterday by Snowy of these delays, and I encouraged them to make this announcement today, and I welcome Dennis Barnes’ announcement today and his notification to AEMO and me telling NEM energy ministers yesterday of these delays because we have to bring the Australian people with us on this journey, and that means being open and transparent about the challenges as well as the opportunities. And we’ll continue to do that.

So we have much, much more to do together. This has become a very important exhibition. Your leadership in the Smart Energy Council is very, very important as well. I see you as joint partners, important partners in this important national journey. In the next 80 months – 2030, it’s now May, 2030 is 80 months away, it’s not long. Some of you have heard me say our daughter started university this year; we dropped her off at kindergarten last week! She has no business going to university. My point is that those 12 years of her schooling went really quickly. The next seven years are going to go even more quickly. We’ve waisted a decade, friends. We have now not a second to waste. Let’s get on with it. Thank you.

PETER HANNAM: So just a couple of questions for the Minister before he has to leave. Minister, you mentioned today that Snowy has identified a delay, maybe 1 to 2 years. Just to be clear, so the latest AEMO was, I think, reporting end of 2027. So we’re looking at the end of ’28-’29, is that right? And, also, any sense of just how much these delays are going to cost?

CHRIS BOWEN: Yeah, that time line you’ve outlined is correct in terms of the completion of the final project. Of course we would hope to have some early progress before then, but December 2027 becomes December 2028 or December 2029, within that range. Again, I’ve encouraged and welcomed Snowy being transparent about the range of options or possibilities available. Of course they’re working very, very hard to make it the earlier part of that. And they’ll be providing further advice to the government later in the year about how they’ve gone. They are resetting the contract with the joint venture partners. Dennis Barnes and David Knox have been spending time in Italy with the key partners in the joint venture and, of course, with their representatives in Australia. I welcome that again, that re-engagement with the joint venture partners, because clearly we all understand – and I understand having, you know, been there and walked through it the sort of engineering complexity which is slowing down particularly tunnel boring machine Florence. Tunnel boring machines Kirstin and Lady Eileen have made much more progress, but tunnel boring machine Florence is experiencing difficulties and we just have to acknowledge that. But they’ll be providing further advice to the government later in the year. And when we receive that advice that will be in the same way made very quickly and openly transparent to the people.

PETER HANNAM: And with the Budget next week, there’s obviously a lot of interest in what it might contain for supporting energy projects or energy efficiency. We’ve already seen 314 million set aside. Is there anything perhaps towards commonwealth fleets switching to EVs? Any particular projects that you might be able to tell us or outline to us today?

CHRIS BOWEN: Well, we’re already committed to converting the commonwealth fleet to EVs, and we’re doing that. The timeline is 75 per cent purchases by 2025, and we’ll continue along that road. So that is nothing new. That’s what we went to the election saying we’d do and that’s what we’re doing.

In terms of other things, it’s no secret that we have been working on an energy support package for electrification and energy efficiency and other measures particularly focused on those who need assistance. I’m not here to deliver the Budget today - the Treasurer will be doing that on Tuesday, as you know. But we have been very clear that that is something that we’ve been working on, and we’ll have more to say on Tuesday. It’s not going to, you know, change the world overnight, but it’s about time the Commonwealth was investing to assist people make that transition. As you know, you’re correct, we’ve already announced the first tranche of that, if you like – around 300 million of tax incentives for businesses, small and medium-size businesses. We'll have more to say on Tuesday night about the rest.

PETER HANNAM: Coming to this podium you would have walked through quite an array of presentations, booths, with companies really from around the world. There’ll be some comments I think later on in this panel about how the IRA will affect the options for Australia and Australian products. But I guess the kind of unspoken element to the IRA is it’s very serious competition towards China. I’m just wondering, as Energy Minister, knowing that there’s a really tight deadline in terms of getting large-scale renewables, solar panels rolled out on rooftops and the like, if there’s any disruption to trade with China, do you consider, like, provisions so where Australia might fill a gap if, for example, whatever reason we can’t import what we need to meet the renewable targets you’ve set?

CHRIS BOWEN: Well, I think, Peter, the problem at the moment is it’s very hard to have those options because when I think about the things which could slow us down in Australia – and I’m pretty determined that nothing will slow us down – but when I think about the things that will try and slow us down, I can think of labour market shortages. We have plans to deal with that, and there’s a lot more we all need to do. Labour market and skill shortages. I think a social licence and the need to work with communities on the infrastructure we need and not to come in and override community views but to work better with communities about the need to roll out infrastructure and how we’re going to do it. I can think of those two things slowing us down – but not stopping us.

When I think about what could actually stop us, it’s supply chains. And you’re right to point to potential geopolitical risks. At the moment, though, the problem is that around 85 per cent of the world’s solar panels a made in China. That will grow to 97 per cent in the next few years as they just ramp up production. And you could use that same metric on batteries, on transformers, on almost everything that we need. So hence the need to do two things: to make more things here. The National Reconstruction Fund and our national battery manufacturing precinct and all our other policies are focused on that.

I mean, I think it’s inconceivable – I mentioned that we put 60 million solar panels on roofs in the last 10 years – 1 per cent of them were made in Australia. We’ve got to put another 60 million on in the next 10 years. It’s inconceivable to me that we’ll just continue along making 1 per cent of them in Australia. That would just – I just do not envisage that being a feasible policy option for our country. And we have to act on that. And we have a lot more to do, and the same goes with all the other factors in the renewable energy supply chain.

And we need to work with other countries to get them making more things, because we are not going to make it all here. But we want the United States making more things. That’s why the Inflation Reduction Act is good for the planet and good for the United States, and we want it to be good for us as well and we want to make sure it’s additional, not distortionary. And we want other like-minded and friends making more things in our region and across the board. You know, I’ve had many discussions – this is the main thing our QUAD energy ministers meetings focus on. I chair the QUAD energy ministers at the moment. We mainly focus almost exclusively on supply chains and what we can do to get each other making more things. It’s a focus in all the various discussions. I dare say it will be a focus in APEC energy ministers later in the year. So we need to be making more things here and encouraging trading partners to make more things so that we all have diversified supply chains.

You know, I want the United States to be able to have us as a supply chain. We need them more as a supply chain and vice versa. This is I think – you know, with respect, it’s a bit hard to say, “Oh, yeah, we’ve thought about things if geopolitical shocks mean we can’t get things from China.” The problem is that would be such a challenge at the moment hence the need to turn that ship around. I mean, this is – it’s good that China makes a lot of these things. That’s very welcome. But we need to diversify the supply chain as well.