Interview with Sabra Lane, ABC AM

SABRA LANE, HOST: Rising mortgage repayments are one pressure on many Australians, another rising energy prices. The federal government promised action to cap gas and coal prices before Christmas to help ease soaring costs. The nation's energy ministers are meeting tomorrow, and the Prime Minister will host an online National Cabinet meeting on Friday. The Climate Change and Energy Minister Chris Bowen joins us now. Good morning. Welcome to AM.

CHRIS BOWEN: Good morning, Sabra. Good to be back.

SABRA LANE: Let's talk about expectations. Will the Prime Minister and Premiers get an agreement on Friday on capping coal prices and how soon will people see that flow through to their power bills?

CHRIS BOWEN: Well, Sabra, the Prime Minister and the Premiers and all the governments, particularly those governments with black coal in their jurisdictions are working hard in the best interests of the country and their respective states to strike the right balance and to make sure that there is a very sensible package developed. That work’s been happening for a while now. And obviously, we're getting closer to the National Cabinet where the Prime Minister and all the Premiers will be able to assess the options and make an announcement after that. But in one, in one way, Sabra the situation is very complex. We've got the implications of the war in Ukraine, the illegal invasion by Vladimir Putin. We're still dealing with the implications of some of the coal fired power station closures in the middle of this year, and the flooding of coal mines that's still flowing through. In one way situation is very complex. But in another way, the objective is very simple. Ensure that Australian industries and businesses are shielded from the worst impacts of this war in Russia, which is in no way, shape or form is their fault. And it would be negligent to let that situation simply flow through and see industries threatened with closure. Governments around the world are dealing with this and dealing with it with quite interventionist responses, including right or centre governments, because this is an unprecedented situation.

SABRA LANE: The budget forecasts energy prices go up 56 percent over the next two years, do you expect if you're able to cap coal prices that that will affect that forecast? Will prices go down?

CHRIS BOWEN: Well, we're obviously not contemplating these measures for fun, we're contemplating those measures to have an impact on electricity prices, Sabra. So yes, of course, any decision that the Commonwealth makes in partnership with the states would be designed to reduce that figure. Self-evidently, I think that's the case. That's what we're working with, the circumstances we're working under and that's why we have looked very, very carefully at all the options methodically worked it through come up with options and ideas, which means that the various jurisdictions use the powers best available to them for the most impact and effect and those conversations have been had in good faith. And while I'm not going to provide a running commentary on them, obviously, the energy ministers meeting tomorrow, followed by the first ministers meeting the National Cabinet meeting on Friday, which is where the key decisions will be made and announced are important in that regard.

SABRA LANE: The Commonwealth has asked the states to apply a cap on those coal prices, but the states want compensation for the billions in royalties that they will lose as a result of this. Will the federal government assist there?

CHRIS BOWEN: Sabra, with due respect, discussions occur between Prime Ministers and Premiers and Treasures and Energy Ministers. And they don’t occur over the national broadcaster as much respect as I have for the ABC and for you. Those negotiations don't occur with you. They occur on the telephone between principals. And those conversations will continue in the lead up to Friday and the National Cabinet.

SABRA LANE: Sure, but many people would think some governments are raking in big royalties right now, because prices have gone up because of the Ukraine war, and now they want compensation for lost royalties.

CHRIS BOWEN: Clearly, we're dealing with implications of the Ukraine war, absolutely. The choice for governments is to allow, frankly, inflated profits off the back of that war and then putting pressure on households and businesses or do you have a response. Clearly, the Albanese Government is choosing to have a response in a complicated environment. We're working through the options very carefully, including with states that have a different set of powers to the Commonwealth and different circumstances. There are some areas where Commonwealth clearly has effective powers, other areas where the states might have more effective responses available to them. Hence, we sat down with the Premiers and those two governments in particular with black coal to talk those issues through a very good faith manner.

SABRA LANE: Energy ministers will tomorrow discuss a way to avoid the power outages that we experienced during winter this year in the eastern states because there wasn't enough dispatchable coal fired power to firm up the system. Power companies then wanted to be paid more to do that. Have you come up with a solution to avoid a repeat of that?

CHRIS BOWEN: Well, energy ministers have been doing that ever since July. I think this is the fourth meeting I've had with energy ministers in my six months as energy minister. And obviously I have tried and I think most would say have, we have been able to get a much more cooperative response and approach around the state energy ministers table with the Commonwealth minister. It's previously been a very testy room, a very contested room. I've tried to work very closely with my state and territory ministers, whether they be Liberals or Greens or Labor ministers to get a good result. And that work has been occurring, we've increased the powers of AEMO, we've increased the powers in relation to gas, we've done a lot of that. The most important thing we'll discuss tomorrow, to be frank with you, is the next step on the capacity mechanism. You would have heard us talk about this before, this is the very important safety net to underpin the transition, we need the transition to renewables to be faster and to be more orderly. It's been, for the last decade, too slow and too disorderly. There hasn't been enough management of the transition by the federal government, and it's occurred too slowly. We need both things to happen. It needs to be faster, but very, very much Sabra needs to be more orderly, there needs to be more management of this transition. Now, what I'll be discussing with my state and territory colleagues’ tomorrow is a model for that capacity mechanism. This has been talked about for a long time, the previous government started the conversation, but they couldn't finish it. What I'm planning to do is to take the conversation to the next level and to really, really drive home a good and faster outcome in relation to a capacity mechanism, which is so important to encourage more dispatchable renewable energy.

SABRA LANE: All right, and you're confident we'll avoid a repeat of what we had earlier this year?

CHRIS BOWEN: Well Sabra, that's what everybody in the energy system is working towards, state ministers Labor, Liberal and Green. AEMO, the Australian Energy Market Operator, the Australian Energy Regulator. Absolutely, we’ve put measures in place to improve the situation from the one we inherited in June. When we were sworn in on the first of June, this is when this crisis was beginning to unfold after 10 years of denial and delay. Obviously, as I said, there's a very good spirit of cooperation around the state and territory energy ministers with us, which I very much appreciate. We come from different political perspectives, but we have one objective.

SABRA LANE: Chris Bowen, thanks for joining AM this morning.

CHRIS BOWEN: Always a pleasure Sabra.