Interview with Patricia Karvelas, ABC Radio National

PATRICIA KARVELAS: Chris Bowen is the Energy and Climate Change Minister, and he joins us this morning. Minister, welcome.

CHRIS BOWEN: Thanks very much, PK, good to be back.

PATRICIA KARVELAS: AEMO says we're going to have reliability gaps as soon as 2027. That's very soon. How will you ensure the lights stay on?

CHRIS BOWEN: Well, the first thing to say, Patricia, is that this report is designed to achieve this very outcome. To let people know, both governments and private sector investors, where the regulator sees gaps in coming years and where investments should be focused. So, it's fulfilling that.

The second report is the last report was just last August. AEMO has taken the decision that there have been so many developments, mainly positive developments, since last August they would update their report just a few months later to provide a new indication. And that indicates that the reliability gaps that AEMO was concerned about in the next couple of years have been closed, with a big uptake in renewable energy investment and that is good news. But yes, AEMO is correctly pointing out that there is still much, much more work to do.

Now to your question about what we're doing about that, a lot, a lot. Now we've negotiated Rewiring the Nation deals with Victoria, Tasmania and New South Wales. None of those are reflected in this report and AEMO says in this report these will make a big difference once they've reached a stage that they can reflect them.

Secondly, at the State and Territory Energy Ministers Meeting last year, the last one just before Christmas, I negotiated with the states what's called a capacity investment mechanism which will underpin and underwrite billions of dollars of investment in dispatchable renewables. We've made good progress on that since we agreed that last year, and that is a big deal. That will unleash at least six gigawatts, at least 10 billion, probably more, over the next few years.

And then finally of course, Patricia, again just before Christmas I announced $176 million worth of investment in large scale batteries right across the national energy grid, the national energy market grid, which will unlock about $2.7 billion of big scale batteries. Which is very important.

So, we need more renewable energy, we need it dispatchable, and as I've said many times to you, PK, and to your listeners, this transition to renewable energy needs to be faster than it has been over the last decade, much faster and much more orderly and reliable than it's been in the last decade and that's what we are achieving.

PATRICIA KARVELAS: You've explained that obviously there have been additional projects which can't be in this report because this only counts committed projects. AEMO believes all mainland states will exceed their energy capacity by 2030. Does that mean that blackouts are inevitable?

CHRIS BOWEN: No, no, and AEMO's not suggesting that. Daniel Westerman, who is a very, very good Chief Executive of AEMO, has not suggested that. It does mean that we've got more work to do. That what we've done over the last nine months is important but when you're making up for four gigawatts of dispatchable power leaving the grid over the last decade and only one gigawatt coming in, you've got a lot more work to do.

Plus, as we electrify, as we make the transition, we're going to need more electricity, not less. So yes, this task is very significant. Of course it is. But the progress we've made so far, I am pleased with. Not yet satisfied with because we've got a lot more to do to lock these down. But I'm very pleased with the progress we've made so far.

Those things that I just mentioned, Rewiring the Nation, you know, the AEMO report makes clear, and Daniel Westerman made clear in his interview with you, we need a lot more transmission. That's exactly what Rewiring the Nation does. The previous government didn't do it. We are doing it. That's what the capacity investment mechanism does. Underpinning and underwriting investment must be dispatchable and renewable. It must be both. And that's important because dispatchable really means storage. It means that, you know, we can generate the renewable energy at the peak periods and store it for the evenings. That's absolutely essential and underpinned by our agreement.

PATRICIA KARVELAS: Given though the report does warn that 2027 we will see gaps and Daniel Westerman said to me every mainland state will actually suffer, does that mean that you can guarantee that in 2027 we won't see these gaps? That you will ensure there's enough investment in the system so that that's not the case?

CHRIS BOWEN: In effect yes, Patricia. In effect yes, that's exactly what we're doing. We're not doing this for fun. We're doing this to generate, one, the renewable investment we need to get to 82 per cent renewables in our grid by 2030. That's a big lift from where we are.

PATRICIA KARVELAS: How is all of this dramatic and fast escalation going to happen under your watch then in time?

CHRIS BOWEN: Well, it's going to happen because we're getting on with the job. We're building the transmission lines.

PATRICIA KARVELAS: When are we going to start seeing the evidence of it in these kinds of reports then?

CHRIS BOWEN: Well, we already are, Patricia, with respect. I mean last year renewable investment was up 50 per cent, that's 4.3 gigawatts, enough to power three million homes and the vast majority of that was after 22 May. You know, so already we are seeing that come through.

The fact this we've legislated our targets, one of the relatively few jurisdictions in the world to actually legislate the targets. The renewable investors I meet with in Australia and around the world tell me that is a game changer for where they focus their renewable investment. That's already happening.

We're already seeing huge interest in our offshore wind policies. As you know I've already designated the first zone in Gippsland. We're making good progress on the second zone and there's much more to do. But already the investment is coming through, there's huge interest. We're seeing huge interest in our transmission. We're seeing the investment in batteries. As I said, that $176 million I announced, some of which was repurposed from some failed previous government programs to actually get big batteries under way, unlocks $2.7 billion of private investment in batteries, which is what we need.

I mean, yes, in nine months have we fixed every single reliability gap for the next decade? No, there's more work to do. Am I pleased with what we've done? Yes. Am I yet satisfied? No.

PATRICIA KARVELAS: So, given the report has to rely on committed projects, when do you expect the report - in the next year or two to say that that shortfall will not happen?

CHRIS BOWEN: Yeah, I do expect that sort of progress, Patricia. Because I mean   

PATRICIA KARVELAS: So, when will it be able to guarantee that? I'm just trying to wonder what sort of time frame you're trying to funnel this investment in by?

CHRIS BOWEN: Well, if we're talking about the sorts of timeframes, I mean as I said the last report was out in August. The AEMO Board took the decision here we are in February to say, "This report is now out of date, we need to update it". That's August to February. I mean that's the sort of progress we're making. You know, this report normally comes out once a year or so. This is a report which has been put out in a much more rapid time frame because AEMO has reached the view that the guidance they provided last August is now out of date because we've seen a lot more investment coming through with renewables.

So, the sorts of decisions we are making across the board are making a difference on that sort of a time frame. I expect AEMO will provide further updates. Is every update going to say, you know, it's all magically fixed? Of course not. This is a very big task. But every update, every update will show in my view very real and substantial progress.

PATRICIA KARVELAS: We've just got to get to a couple of other issues before I let you go. Today Australia's biggest steel maker BlueScope is warning the company may shift offshore if the safeguard mechanism is too onerous. Are you listening to that threat?

CHRIS BOWEN: Of course, I've been talking to BlueScope. I've been talking to people across the board. You know, welcome to climate policy, Patricia. There are people on your show saying our safeguards policy goes nowhere near far enough. There are other people saying it goes too far. I believe we've got the balance right.

Of course, on the 9th of January I put out the Government's preferred position, but I also indicated that it would be open for consultation until the end of February, that's the end of this week. I'll then read through every submission and update our policy in response to the submissions where I think a valid case for reconsideration has been made. But of course, what we want to be is a country that makes things. Of course, steel is absolutely essential to our transition, and we're going to need a lot more steel for the transition.

PATRICIA KARVELAS: What do you have to change to ensure that they provide a guarantee that they remain in Australia?

CHRIS BOWEN: Well, I've had good discussions with BlueScope, and they've reflected that in their public statements, I think. Of course, I've had good discussions across the board. I've had good discussions with environmental groups about our safeguard reforms. This is a big reform which takes 205 million tonnes of emissions out of the air by 2030, which is equivalent to two thirds of Australia's cars. It's a big deal. So of course, people have views about every nuance, and I don't suggest for one moment, never have, that beyond the 9th of January this was set in stone and there wouldn't be a case to talk to people about their views about this. I said that on the 9th of January when I released this.  But of course, whenever you're doing a big and difficult reform people will have views about it. People will say, "Oh, this could be done better" or "This doesn't go far enough" or "This goes too far".
 
PATRICIA KARVELAS: Oh yeah, for sure. So, you need the Greens, we know this, to get this through, the safeguard mechanism. The Greens say they are willing to consider a climate trigger where the environmental impact will have to be taken into account when assessing new projects. Is that something you're willing to negotiate on?

CHRIS BOWEN: Well look, Patricia, as I said to you last week, I'll sit down with people in good faith across the Parliament. What we do will be in keeping with, one, our election commitments and, two, what we need to do in the national interest.

I mean you and I have just had a conversation about the importance of keeping the lights on and we're getting to 82 per cent renewables by 2030. That's a big lift from where we are. It does mean that 18 per cent of our energy grid will not be renewable by 2030. It means we need to ensure that reliability.

They're the sorts of things I have to consider and weigh up. My obligation is to get emissions down, keep the lights on, create jobs, create investment.

PATRICIA KARVELAS: You also need to get it through and so if the climate trigger is a way of getting it through is that a mechanism rather than just a ban on coal and gas?

CHRIS BOWEN: I'm not going to negotiate with Mr Bandt through you, with respect. I'll negotiate with Mr Bandt with Mr Bandt. And just as we did on the climate bill, which people said we wouldn't pass because the Liberals were against it and the Greens said it didn't go far enough, just as we did on the electric vehicle tax cut which didn't have the numbers to start with, just as we did the electricity relief package which didn't have the numbers to start with, our track record is to work with people of good faith across the Parliament and get things done and that's the same approach I'll be taking here. But we won't be, you know, signing blank cheques to other people. I'll be acting in the national interest and acting in accord with our election commitments.

PATRICIA KARVELAS: Very briefly. You're a former Shadow Treasurer, superannuation tax breaks look they're under review by your government. Didn't you promise that you wouldn't touch them?

CHRIS BOWEN: Well, I think Jim Chalmers made a very thoughtful contribution yesterday about this and, you know, having a sensible mature conversation with the Australian people. I was a bit gob smacked to hear the Shadow Minister on your program just a little while ago say, "Oh, you know, it doesn't matter that women don't get fair share of superannuation concessions" and just laughed that off. That really surprised me and I'm pretty hard to surprise these days in politics, Patricia, that sort of glib dismissal of real issues that the Treasurer is putting on the table.

Superannuation is a magnificent national achievement which my side of politics is very proud of, and it means that Australians who have been on low and moderate incomes during their working life have a chance of a dignified retirement. I think the Treasurer pointing out that we need to ensure it's equitable and sustainable should be relatively uncontroversial. The fact that the…

PATRICIA KARVELAS: Well, you did promise not to touch it, that's where the controversy lies.

CHRIS BOWEN: Well, the fact that the Shadow Minister took offence at the words equitable and sustainable this morning I found a little surprising.

PATRICIA KARVELAS: Okay, we're out of time. Thank you so much, Chris Bowen.

CHRIS BOWEN: Always a pleasure, Patricia.