Interview with Sarah Ferguson, ABC 7.30

SARAH FERGUSON, PRESENTER: Chris Bowen, welcome to the program.

CHRIS BOWEN, CLIMATE CHANGE AND ENERGY MINISTER: Thanks very much Sarah.

SARAH FERGUSON: Warnings have emerged that retail energy prices could rise by 35 per cent next year. That's a devastating prediction that would hit families and businesses incredibly hard. How would your government cope with that?

CHRIS BOWEN: Well, I certainly firstly agree, Sarah, that energy prices are under enormous pressure and will continue to be under pressure as a result of a couple of things.

The most difficult geopolitical circumstances we've probably faced since the 1970s, Russia, one of the biggest, if not the biggest energy supplier in the world effectively out of action and of course, the ramifications of ten years of denial and delay; the fact that 4 gigawatts of energy generation came off over the last decade and only 1 gigawatt came on, means that we are now paying the price of that ten years of delay and denial.

But to your question, Sarah, about what we will do; we will continue to implement the policies we took to the election which are all about getting more renewables into the system because they reduce emissions yes, but also, Sarah, because they are the cheapest form of energy, as our market operator says, by a country mile, and more renewable energy means that energy prices are lower than they otherwise would be.

So that means building the transmission to get the renewable energy on, it means building the storage, all the things we went to the election, which we've made good progress on, and I'm pleased with that progress, but I'm not satisfied because we have an enormous amount left to do.

SARAH FERGUSON: Let's come to the transition in just a moment but this projected jump in retail energy prices would be on top of an increase already this year. I think prices are up by $300 since April.

Given that, how will Labor be able to fulfil its election promises to achieve a drop in energy prices?

CHRIS BOWEN: Firstly, Sarah, energy prices are obviously elevated, but they are moving around.

So, for example, wholesale prices are down around 43 per cent from their peak in July. They are still too high, but we are seeing high volatility.

But I tell you what isn't changing, Sarah, the fact that the more renewables you have in the system, the lower energy prices will be; the fact that you need government policy to encourage renewable energy and that's why we're so committed to getting to 82 per cent renewables by 2030.

That's the underpinning of our climate change objective, absolutely, but it also is the underpinning of our process in place to ensure that energy prices are as low as they can possibly be, yes, in very difficult circumstances.

SARAH FERGUSON: Yes, that's the ambition. Your colleague the Treasurer said today that he's taking it very seriously and it's the reason that inflation, high inflation may hang around longer because of these potentially very high energy prices.

He said it's one of his deepest concerns. Your portfolio could then be fundamental to keeping inflation down. How will you do it?

CHRIS BOWEN: We will do it, as I said, and of course, I agree with what the Treasurer said today and he and I talk about these issues very regularly.

But what we'll do, as I said, get on with the job of building 10,000 kilometres of transmission lines. Why? Because that's important to get the renewable energy from where it's generated to where it will be consumed and that's vital to get the degree of renewable energy we need into the system.

We will continue to work with our states and territories and I'm delighted that the states and territory ministers, energy ministers agreed to develop the National Energy Transformation Partnership. That's really important, because we need not just a national plan, not just state plans, we need those plans integrated to get renewable energy on and get the transmission and storage built to ensure that our system is robust and reliable as we make the necessary transformation, is a word I would use more than transition, transformation to a more renewable economy.

SARAH FERGUSON: But just to stay with these prices for a minute because they are shocking numbers. We just said an increase of $300 this year. The question is, how you can still deliver the drop in prices that you promised at the election with such a very, very large increase, perhaps coming next year.

CHRIS BOWEN: And I'm certainly acknowledging that this is against a very difficult backdrop but what I'm also pointing out to you is that those policies which we said we would deliver are even more important against that backdrop. That's the point I'm making, to reduce power prices, to get emissions down, actually the same levers achieve both things.

SARAH FERGUSON: Let me ask you this question. I mean in the UK, where in fact they're facing an even more dire situation with energy prices than we are, they are using price gaps to protect vulnerable consumers. Would your government consider intervening with price caps, with tougher caps in Australia?

CHRIS BOWEN: Well, we have a system of rules in place already which we had to implement in the very early days of the new government.

AEMO (Australian Energy Market Operator) had to implement working closely with me and with all the states and territories in the national energy market. So there is already a regime, but it's not a hard price cap, if your like, but it's already a regime for the regulator and the operator ...

SARAH FERGUSON: Would you consider changes to that in the face of...

CHRIS BOWEN: ... for the operator the step in. I'm not contemplating the sorts of things that you are proposing. What I am saying is that we will continue to work with the operator and with the regulators to ensure that our regulatory regime is as fit for purpose as is possible against this challenging backdrop.

SARAH FERGUSON: One of the energy leaders yesterday made the point that the costs of replacing coal-fired power plants is getting more expensive. Is that a reality check on your ambition of energy transition and also, of course, lower retail prices?

CHRIS BOWEN: Well, he's right to point out the supply chain is under pressure, of course, and that's the case not just in renewable energy by the way. That's the case for just about anything in our economy at the moment and a supply chain under pressure puts upward pressure on prices. So that is right.

But it still doesn't change one iota, Sarah, of the fundamental point, and I know I keep making it but I keep making it because it is so fundament and important - that renewable energy is by many lengths of the straight, the cheapest form of energy.

And those supply chain constraints don't change that. So, the key is getting more renewable energy on at a much faster rate.

Our transition in Australia has been too slow and too disorderly. Our policies are all designed to make it faster and to make it more orderly.

SARAH FERGUSON: Let me ask you a question then about the scale. The scale of the investment required to build the grid as you know, is enormous. Two or three times what the industry has been doing in the last 20 years. You've now got to do it in seven years to meet your targets. Is this what the industry...

CHRIS BOWEN: Eighty-six months.

SARAH FERGUSON: Thank you, thank you for that correction. Not correction, thank you for pointing ...

CHRIS BOWEN: Not a correction, just a clarification.

SARAH FERGUSON: It is a fact.

CHRIS BOWEN: I think it underlines, I'm agreeing with you how urgent this transformation is. Eighty-six months to get this job done because we wasted a decade, we now have 86 months between now and 2030.

SARAH FERGUSON: Isn't that what the industry is asking for which is a very frank conversation with the public about whether that ambition is achievable given those constraints that you just listed - cost, and personnel as well?

CHRIS BOWEN: It's a big challenge but it's an absolutely essential challenge for us to undertake because of the two reasons.

We have eight years, 86 months, between now and 2030, to get emissions down because that's the key decade in terms of holding the world as close as possible to 1.5 degrees.

I know you're talking about energy prices but let's not forget about the very important international challenge of climate change but at the same time, of course, getting more renewables is the best way, in fact, the only way, to provide any possibility of getting downward pressure on energy prices.

We need much more renewable energy. Yes, that's judge, we need to build a lot of wind, we need to build a lot of solar. We need to build offshore wind, which this government is proceeding at a rapid pace to do, in conjunction with the private sector and with the states.

We need to do all the above and build the transmission and that's exactly what our policies are doing.

I am going to have more to say about that in the not-too-distant future about progress there but we've been getting on with it at a rapid pace in our first five months.

As I said before, I'm pleased with what we've been able to do, passing the Climate Change Act through the parliament, notifying the UNFCCC (United Nations Framework Convention on Climate Change), working with the states and territories very closely. All pleasing but I'm not satisfied. We have a huge amount of work to do ahead of us.

SARAH FERGUSON: Chris Bowen, thank you very much indeed for your time this evening. I appreciate it.

CHRIS BOWEN: Thank you. Thank you for your time, Sarah.