Interview with Sarah Dingle, ABC Radio National

SARAH DINGLE: We're all a bit more energy price conscious this Christmas as we switch the fairy lights on the tree, prepare a roast for the oven or turn on the air conditioning to cool down. The Albanese Government came to power pledging to bring down power bills through increasing the share of renewables, and they've just announced more money to connect renewable energy to the electricity grid. Climate Change and Energy Minister, Chris Bowen, joins me now. Minister, welcome back to Breakfast.

CHRIS BOWEN: Thanks Sarah, good morning.

SARAH DINGLE: You've just announced $4.7 billion for renewable energy infrastructure in New South Wales. What exactly will be built with this money?

CHRIS BOWEN: So this is part, Sarah, of our Rewiring The Nation commitment that we took the election, you'll remember, and that's a $20 billion fund, basically to upgrade our grid, to make it fit for purpose for a renewable based grid. A renewable based grid just doesn't happen, it needs a grid which is fit for purpose, and we don't have one in Australia. So this is a big investment, it's a partnership with the New South Wales government to bring on the transmission we need for renewable energy at lowest cost, and at fastest pace possible.

So it's $4.7 billion from us, from the Federal Government, $3.1 billion from the New South Wales government, so it's a good partnership, a $7.8 billion investment in total, which will unlock about $12 billion of market benefit and also unlock a lot of private sector investment and a lot of renewable energy, particularly in the regions, so whether it be the Central West or The Hunter Valley, or New England, all New South Wales government renewable energy zones, which create a lot of jobs in those regions and a lot of energy for the entire state, and indeed the entire National Energy Market grid, and it's a partnership to get those projects up and running and under way.

SARAH DINGLE: So it's all about connectivity. It's going to connect Snowy Hydro 2.0 and some renewable energy zones to the grid. Those renewable energy zones are still at the tender process. Can you build both the projects and the transmission lines simultaneously without any issues?

CHRIS BOWEN: Yeah, we have to basically that's got to be our aim. No point having one finished before the other really, and so that's why this deal was so important. Now, these are lines which have been identified in the, what's called the Integrated Systems Plan, which is the market operators' very comprehensive best practice plan about what sort of transmission we need to make our grid fit for purpose. You mentioned Snowy 2.0, for example, which is an important project. It's running around 18 months late, so it was meant to start in 2025, it will now start, unfortunately, much closer to 2027. But we'll get the HumeLink to connect it up and running by say 2026 and a VNI West Link to connect it to Victoria after that.

So, yes, it is about making sure that the transmission matches the development of the projects, because there's absolutely no point developing this renewable energy unless we connect it to the grid, and likewise the grid connection's important to bring on and unlock that clean, green, cheap, renewable energy, which is so important for so many reasons.

SARAH DINGLE: If keeping construction on both sides of the coin in sync is so key, how will you make sure that these projects stick to their timeline, and we don't see the time and cost blow outs which have bedevilled Snowy 2.0.

CHRIS BOWEN: Well, I mean I think that's the challenge for all of us, and also this agreement that we've struck with New South Wales makes it a lot easier, because we are in a global race on transition. I mean the rest of the world is doing this too, for example. So booking in the slots to get the raw materials necessary, the metal, the very high voltage wires, et cetera, is very important, and it's a global race. And so, these funding deals that we've announced yesterday, together with the deal we announced with Tasmania and Victoria earlier in the year, and the deals that we will announce with other states and territories in the not-too-distant future, really give the developers the certainty they need to get on with the job.

So Transgrid in New South Wales, for example, really needs that certainty to say, okay, it's funded, it's clear, we have a clear business case, clear funding. We can now book these important materials, so that does make it important.

Now, there will always be challenges. Snowy 2.0 as you said, when we came to government, we were told it was running 18 months late, that remains the case. There's always going to be challenges, particularly around supply chains, labour shortages. That's why careful planning, prudent management is so important to really minimise the risks of those challenges.

SARAH DINGLE: Well, this joint funding announcement with New South Wales, I mean New South Wales received this funding because it signed up to your government's energy market intervention, which included the price cap on gas and coal.

CHRIS BOWEN: We'd already been talking about it for a long time before that, Sarah.

SARAH DINGLE: Sure.
 
CHRIS BOWEN: I mean you don't do these deals in a matter of days.

SARAH DINGLE: No.

CHRIS BOWEN: Yes, of course we've got broader agreements with New South Wales, but also we've had agreements with Victoria and Tasmania, we will have agreements with our jurisdictions.

SARAH DINGLE: Well, that's what I want to ask you. It's been reported that your talks with Queensland are at an advanced level. What is Queensland going to get for signing up to your intervention?

CHRIS BOWEN: Well, Queensland had, Annastacia Palaszczuk and Mick de Brenni have already announced a very ambitious renewable energy plan, which is great, and we fully support them in their ambitions, just as we fully support the New South Wales and Victorian and Tasmanian ambitions, and indeed the Western Australian ambitions, and the very excellent plans of the Malinauskas Government in South Australia, et cetera.

So, we work in partnership with all governments of any persuasion. Yes, Minister de Brenni and I have been talking about how Rewiring the Nation can support their ambitious plans. These negotiations and discussions don't happen overnight, Sarah, you know, it would be no surprise for our listeners to hear that negotiations start with two parties a bit of a distance away, about who's going to pay for what. That was the case with Marinus Link in Tasmania, but over many phone calls between me and my State Energy Minister colleagues, many meetings, many sort of late-night text exchanges, we get to an arrangement, and then once we've taken it through our respective Cabinet processes, we announce that arrangement. That's what happened yesterday in New South Wales, it's what's happened with Tasmania and Victoria, it will happen with the other states when, and only when, I can tell the Prime Minister that we're satisfied that the Commonwealth taxpayer gets a very good deal, when the State Ministers can tell their Premiers they're satisfied that it's a good arrangement, and we have all the necessary plans in place. These things take, you know, many weeks if not months of discussion to get it right.

We have had very good discussions with my colleague, Mick de Brenni in Queensland, but, you know, those discussions will continue.

SARAH DINGLE: Wait and see I guess. Now, the gas industry is up in arms about your energy bill which passed last week. It says the solution to high gas prices in Australia is not price caps, it's getting more supply on board. Do you agree, will you encourage further investment in expanding gas production in Australia?

CHRIS BOWEN: I mean, Sarah, 96 per cent of gas sold in Australia in 2021 for under $12, under our cap. Now, the gas industry, some in the gas industry are saying it's an absolute disaster that they can't charge whatever they want. I don't agree with that. I do not accept that. Australians, I don't think, accept that. This is Australian gas on Australian soil and Australian seas, and if he they want to make mega profits with their exports off the back of the war in Ukraine, we're not going to interfere with that, but we will, we will not allow mega profits for gas companies off the backs of Australian industry. We would have seen Australian industries fold next year in the absence of government response. Now, we're not going to let that happen, the states weren't going to let that happen. Why should Australian industry, no fault of their own that there's a war in Ukraine, big factories, big industrial producers, be forced to shut because they couldn't afford their gas.

SARAH DINGLE: Sure, but will you let the gas industry produce more so that they can offer more of a lower price?

CHRIS BOWEN: The gas industry has been talking about more supply for a long, long time, and of course most of the gas produced gets exported. Now, gas exploration and production is by and large a matter for the states. So we with work with whatever approach the states take, every state has a different approach. I don't seek to instruct or lecture states about what approach they should take. We work with the regime they have in place. What I'm focussed on doing primarily is ensuring that the massive transition we need in the Australian energy market and Australian industrial producers to cheaper, cleaner energy is well managed.

Now, we are going to need gas in the system for some time to come, because it is flexible, you can turn a gas fired power station on and off very quickly compared to a coal fired power station, and that means we don't waste emissions as we're burning gas over a long period of time. And gas companies, and energy generators to their credit are getting that more and more efficient. You can now turn some on and off within five minutes, which means it's very important for peaking and firming as we make this transition to 82 per cent renewables by 2030. Very important to have gas in the background to support that transition to have that flexibility for peaking and firming as we make this massive transition under way.

So gas has a role to play in that system, but anybody who suggests that, you know, there's a magical gas led recovery as the previous government promised, it was always a fraud, Gas has a role to play, but simply talking about supply does not solve any problem, and there is no proposal that I see that would magically get more gas supply into the system tomorrow, which would take the pressure off energy prices next year. It would not happen. There is no credible plan for that. And so, while obviously states will continue in their various approaches, we'll manage the transition carefully, prudently, and with all the necessary tension that such a massive transition requires.

SARAH DINGLE: You have called the notion of a gas led recovery, and I'm quoting you here "bullshit" and you've said that.

CHRIS BOWEN: Not a term I'd normally use on morning radio, Sarah, but there you go.

SARAH DINGLE: You know, we're a broad church here at Radio National. And you said that you do not regard gas as a transition fuel. So I want to ask you about the size of the role that gas has to play in Australia's energy mix. What percentage roughly do you see gas being part of the mix as you try to get straight to the long-term prospect which your government says is renewable energy?

CHRIS BOWEN: Well, Sarah, yes, I do not regard it as a transition fuel or a low emissions fuel, but I do regard it as a flexible fuel, as I said. So as we're building the storage and the transmission we need for renewable energy, yes, gas continues to play that role. But, for example, you asked about percentages, we are, we intend to be, and I believe we will be at 82 per cent renewables by 2030. That's only, in a couple of weeks, seven years away. That's a very fast transition. As coal fired power leaves the grid, as it inevitably is and will continue to do, gas plays the bulk of that supporting role over and above 82 as we strive then to put more than 82 on.

So gas will be in the background as we make that transition to 82 per cent renewables, and we'll be taking up an increasing role as coal fired power inevitably leaves the grid. Coal fired power stations are and will continue to close. Anybody who suggests there will be new ones is lying, as, you know Matt Canavan and the Liberals, some Liberals, pretend that there will be new coal fired power coming on, that won't happen, certainly not under our government. But gas will continue to play a role in the background supporting that transition to renewables.

SARAH DINGLE: Minister, thank you for your time. Hope to speak to you again soon.

CHRIS BOWEN: Always a pleasure, Sarah. Unlikely before Christmas, so all the best to you and your family, and all the best to the listeners who we've had many chats with over the course of this year and see you bright and early in the new year.

SARAH DINGLE: See you then. Climate Change and Energy Minister, Chris Bowen.