Latest / The Morning Edition / No ‘drill baby drill’ moment: Chris Bowen on oil shock’s impact on green Australia

Transcript

No ‘drill baby drill’ moment: Chris Bowen on oil shock’s impact on green Australia · The Morning Edition

• 0:00
  S1: I'm Paul Sokal and you're listening to Inside Politics from
• 0:03
  S1: the Age and The Sydney Morning Herald. Our regular host,
• 0:05
  S1: Jack Maly, is away this week. So joining us is
• 0:08
  S1: our climate and energy correspondent, Mike Foley. The minister for
• 0:14
  S1: climate Change energy, Chris Bowen, is also with us. A
• 0:17
  S1: fire at one of Australia's last remaining oil refineries on
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  S1: Wednesday night has put a spotlight on Australia's poultry fuel supplies.
• 0:24
  S1: Bowen has been at the centre of Australia's scramble to
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  S1: lock in petrol and diesel imports, as the nation tries
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  S1: to get through one of the most severe oil shocks
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  S1: in history. The pugilistic minister, formerly a treasurer in the
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  S1: Rudd government, is a lightning rod in the debate on
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  S1: Australia's transition to a renewables dominated energy grid. We ask
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  S1: him about the rocky path to a green economy and
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  S1: how Australia's position to deal with the war and its
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  S1: consequent energy crisis. Welcome, Chris.
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  S2: Thanks, Paul. Good morning. How are you?
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  S1: We're well, uh, we're recording on a day when there
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  S1: is a fair bit of news around on this issue
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  S1: and a quite a serious news event. Uh, tell us
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  S1: what you can say about the fire at the Viva
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  S1: Oil refinery, one of Australia's only refineries left one of two,
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  S1: which happened overnight on Wednesday. It looks like diesel production
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  S1: is not affected, but petrol very much is how much
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  S1: of a hit to petrol production could this have? Chris.
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  S2: So at this stage it's right. I mean we're recording it,
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  S2: you know, 9:00 in the morning on Thursday and the
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  S2: fire broke out at 11:00 last night. It's still burning
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  S2: as we speak. It's not yet under control. Um, but
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  S2: I was in communication with the chief executive through the night. Um,
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  S2: his best advice to me at this point is that
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  S2: diesel and jet fuel production is not impacted. It's been
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  S2: reduced for now. Um, as, uh, you know, as a
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  S2: safety precaution, there is likely to be some impact. There
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  S2: is already an impact and there will be some impact
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  S2: on petrol production. Um, but it is still very early. Um,
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  S2: we're you know, monitoring closely, working closely with the company. And,
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  S2: you know, as soon as we have a better line
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  S2: of sight as to the degree of damage, then we'll
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  S2: update people. But yeah, it's not a positive development and
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  S2: not great timing.
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  S1: And there was a line from the CEO on Thursday
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  S1: morning saying that there is a hope that we could
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  S1: replace the lower output with increased importation of refined petrol.
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  S1: How would that look?
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  S2: Yeah. And that's part of our, you know, arrangements we've
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  S2: put in place with Export Finance Australia to go and
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  S2: get extra cargoes as and when required. We legislated that very,
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  S2: very quickly. It's progressing well. And I think you know
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  S2: what what Scott's talking about there. Scott White, the chief
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  S2: executive was talking about there, is potentially using that to
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  S2: make up for some of the shortfall which might be
• 2:43
  S2: caused by the fire.
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  S1: Yeah. Okay. Just on the broader timelines on when we're
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  S1: likely to have fuel stocks locked in for, you've been
• 2:50
  S1: quite positive pushing out that deadline up to nearly June. Now,
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  S1: the time from which fuel supply might get rocky unless
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  S1: we continue to build out those stocks. Can you run
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  S1: us through the risks on what might occur over coming months,
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  S1: and what measures we're taking to ensure that deadline continues
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  S1: to get pushed out? And also what kinds of measures
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  S1: we might need to look at to conserve fuel in
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  S1: coming months.
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  S2: Yeah. So, I mean, I think the important thing a
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  S2: couple of couple of sort of threshold questions. If threshold
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  S2: points firstly, you know, as I said many, many times,
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  S2: no cargo that we've expected in Australia to arrive has
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  S2: failed to arrive. Um, and the refineries until today have
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  S2: been working full pelt. So actually the supply of fuel
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  S2: to Australia, which is the federal government's primary responsibility, has
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  S2: been very solid. And we have confirmed forward orders now
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  S2: through May. Um, basically, uh, so all the orders, uh,
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  S2: through May are, are locked in. Um, and more than
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  S2: just contracts, we have what's called nominations. Um, and what
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  S2: that means is Basically, we know when the ships will
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  S2: leave port in Asia primarily, and when they'll arrive and
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  S2: what ships they'll be on. So that's a so that's a,
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  S2: a higher degree of certainty. Um, a higher degree of certainty.
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  S2: Now there's always risks and there can be force majeure, but, um,
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  S2: it is contracted and locked in and indeed more than that,
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  S2: we have, you know, visibility as to what, uh, what,
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  S2: what ports and when they arrive in Australia, but the
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  S2: way the import industry works is, you know, the, the
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  S2: ships get locked in 4 to 6 weeks in advance.
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  S2: That's how it normally works and that's how it's working
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  S2: at the moment. So as soon as you get beyond
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  S2: six weeks, you're you're dealing with a higher degree of certainty.
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  S2: There have been orders made for June, but you know,
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  S2: we are not yet in a position to say that
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  S2: all of June is covered. Um, but certainly all of
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  S2: May is. And every day that goes past, there's more
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  S2: orders coming in.
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  S1: Now all of.
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  S2: This.
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  S1: Is covered now. Chris. So that's a little bit of a,
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  S1: that's a slightly more positive than the last time you
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  S1: gave this update.
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  S2: Yeah. And that's, you know, to be expected because we're
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  S2: making progress each day. Um, now, you asked what the
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  S2: risks are. Obviously. 70% of Asia's oil comes through the
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  S2: Straits of Hormuz, right? So, um, you can only refine
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  S2: oil that you have now. Uh, there is, you know,
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  S2: I've been speaking not only to the chief executives of
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  S2: the Australian companies, but some of the Asian companies as well.
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  S2: You know, they have oil on hand. They are refining
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  S2: and processing. That's why, you know, they can say they
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  S2: can enter into contracts into May through May now. Um,
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  S2: and the Asian refineries are also diversifying their, their oil
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  S2: supply as we are, you know, um, most of our
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  S2: refined product comes from Asia, but not all of it.
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  S2: And it's getting increasingly diversified. You know, Algeria normally supplies
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  S2: about 1%. It's supplying much more than that at the moment.
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  S2: Similarly with Argentina as well as the United States. So
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  S2: we've been diversifying our supply. Now what won't happen is,
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  S2: you know, we'll get boats and boats and boats and boats,
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  S2: and then one day they'll all stop. But that, that
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  S2: that is just not going to happen. What is more
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  S2: likely going forward if this continues this situation, Straits of
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  S2: Hormuz continues for weeks and months, is that we have
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  S2: bumps in supply and disruptions, not an immediate, you know,
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  S2: not a not a not 100 to 0, but we
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  S2: have some interruptions to supply over the next few months.
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  S2: But as I said, the current situation is 4.1 billion
• 6:22
  S2: liters locked in for the next four weeks. Um, uh,
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  S2: confirmed contracts and orders all through May and starting to
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  S2: get into June now. Um, and that's a good thing.
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  S1: Part of what the government's been up to has been
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  S1: dealing with our Asian neighbors to lock in as much
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  S1: of a guarantee of supply as possible. We understand you
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  S1: spoke to the Japanese Prime Minister on was it Wednesday night?
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  S1: Can you explain what you learned from her? And did
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  S1: you gauge concern from the Japanese on the prospect of
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  S1: a new tax on Australian LNG exports?
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  S2: No, certainly not. Not the not the latter. That didn't
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  S2: come up. Um, just to be clear was a conversation
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  S2: between Asian leaders, which the PM asked me to represent
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  S2: him on because obviously he's in Malaysia. So it was
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  S2: the Prime Minister of Japan, the Prime Minister of Singapore, um,
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  S2: president of East Timor, the Prime minister, you know, represented Bangladesh, um, uh,
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  S2: Sri Lanka, India, um, a whole bunch. Um, and I
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  S2: represented Australia. What was clear, I mean, there were two
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  S2: take aways from me and, um, you know, I wasn't
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  S2: really sure what to expect, but the two takeaways were, um, one,
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  S2: let's all work together in the immediate future. Um, you know,
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  S2: that was very common and, you know, we're all better
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  S2: dealing with this together. And two, interestingly, this underlines the
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  S2: need to keep going with our drive towards more reliable
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  S2: renewable energy. That was very strong, um, amongst the Asean leaders. Um, and, uh,
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  S2: you know, others to say, this is a reminder of
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  S2: why we need to build more reliability and renewable energy
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  S2: and things like the Asian energy grid. Um, uh, to, um, to, to,
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  S2: to basically keep going with that work.
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  S3: G'day, Chris. Thanks for being on the podcast. Look, it's great.
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  S3: It's great to be able to talk to you a
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  S3: bit behind the news here because I had a question
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  S3: about Australia's place in the Asian region where we're getting reports,
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  S3: anecdotal reports from fuel companies that say there's a a
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  S3: new trend where some companies that are seeking to import
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  S3: fuel to countries that, you know, emerging economies like Thailand, Philippines,
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  S3: or whatever those shipments are, may have become too expensive
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  S3: in some cases for the original customers. And that's opening
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  S3: a door in certain instances for Australian companies to, let's say,
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  S3: swoop in. Now let's cast our mind back to another
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  S3: global calamity in the Covid crisis where supply chains were disrupted.
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  S3: And Scott Morrison, the then prime minister, said that this
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  S3: is not a race to get vaccines. What I'm wondering is,
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  S3: is how does this new trend that's emerging stand Australia in?
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  S3: Is it in good stead in this race to get fuel?
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  S3: I mean, obviously this is a pretty nasty scenario for
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  S3: poorer countries that won't be able to buy fuel as
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  S3: readily as Australian companies can. Can you tell us about
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  S3: this scenario? Is that part of the government's moves to
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  S3: underwrite private companies that are importing fuel?
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  S2: So, um, mark the situation without commenting on, you know, whether, uh,
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  S2: other countries are missing out. The situation is basically there
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  S2: are cargos available, but they're very expensive. Um, and that's
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  S2: why we've done the EFA thing because two things are happening.
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  S2: They're very expensive. They might be $25 million more than
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  S2: they were a month ago. That's a lot for a cargo. Right.
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  S2: So they're out there. And also because the oil price
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  S2: is moving around quite a bit and because, frankly, you know,
• 9:52
  S2: moves on a Donald Trump, you know, truth social post,
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  S2: like it impacts on the markets. Um, and it takes
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  S2: a while for the cargoes to get to Australia, then
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  S2: it's risky because if they buy a cargo, you know,
• 10:04
  S2: 25 or $50 million over the odds, and by the
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  S2: time it gets to Australia, the oil price has collapsed
• 10:09
  S2: and they've exposed their shareholders. So that's the whole principle
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  S2: behind our intervention with Export Finance Australia. So in a
• 10:16
  S2: in a I'm sort of agreeing with you. Yes. There's
• 10:18
  S2: cargos out there. They're very expensive. Is Australia well placed
• 10:21
  S2: to get them? Well with the EFA intervention? Yes we are.
• 10:24
  S3: And another thing I've been dying to ask sort of
• 10:26
  S3: a bit behind the news here where we saw those
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  S3: um alarming.
• 10:30
  S2: Behind the news. We use WhatsApp as a kid like
• 10:32
  S2: I did at school behind the news with ABC.
• 10:34
  S3: I pretended to understand it, but I was probably too
• 10:36
  S3: lazy to take it in. I was more interested in
• 10:38
  S3: watching cartoons.
• 10:39
  S1: We're just a tiny bit more advanced than that program,
• 10:41
  S1: but just a little bit.
• 10:44
  S3: We try to reach their standards of journalism. Let's let's
• 10:46
  S3: put it that way. But, um, but Chris, localized shortages,
• 10:50
  S3: surveys ran out of petrol and diesel and we heard
• 10:53
  S3: and we saw evidence to be fair, that that was
• 10:55
  S3: due to panic buying. But what I'm wondering is surely
• 10:58
  S3: there are only so many jerry cans that motorists can
• 11:02
  S3: fill up across the country. And I want to know
• 11:04
  S3: what we've learnt about regional supply chains and how those
• 11:10
  S3: panic buying shortages actually occurred. What I'm really asking is,
• 11:14
  S3: were big companies commercial and industrial fuel users understandably stocking up?
• 11:19
  S3: Were they a driver of some of those or a
• 11:22
  S3: big factor, let's say, in those shortages?
• 11:24
  S2: Partly. Um, so I mean, I guess a few things
• 11:27
  S2: were happening at once, right? Um, so there was a
• 11:30
  S2: big increase in demand. And as I, as I said publicly,
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  S2: I don't like lumping all that into one category. Some
• 11:36
  S2: was panic buying, no question about it. Some was people,
• 11:39
  S2: you know, buying jerry cans and trying to sell them
• 11:42
  S2: on Facebook Marketplace, which is pretty ordinary behaviour. Some was
• 11:46
  S2: just people thinking, well, the energy, the price of fuel
• 11:48
  S2: is going to go up, so I'm going to buy
• 11:50
  S2: while I can, which I don't regard as panic buying.
• 11:52
  S2: It's more sort of just bringing forward purchases. But to
• 11:55
  S2: your point, and this is this, I'm glad you've asked
• 11:57
  S2: this because it is important and does go to explaining
• 12:00
  S2: to people a bit what's been going on here. The
• 12:03
  S2: fuel market really works in two systems the contracted market
• 12:06
  S2: and the spot market. And the contracted market tends to
• 12:09
  S2: work in the cities and the big players, the big miners, etc.
• 12:13
  S2: and the spot market tends to be works in the bush.
• 12:16
  S2: And with the contracted market, you don't, you know, have
• 12:19
  S2: just a contract to say, we will buy X million
• 12:22
  S2: litres a month. You're able to buy between, you know,
• 12:25
  S2: this and that. So you have a contracted amount which
• 12:28
  S2: is a minimum and then a maximum. And what happened
• 12:30
  S2: was everyone with the contract immediately brought their maximum, you know,
• 12:34
  S2: just bought as much as they could. And they were
• 12:36
  S2: legally the refineries were legally obliged to honour those contracts.
• 12:42
  S2: And that moved to move to what is called in
• 12:44
  S2: the industry bulk allocations, which means basically the contracts are
• 12:47
  S2: taking the fuel. And so for those who play the
• 12:49
  S2: spot market, um, then the spot market wasn't working because
• 12:53
  S2: the contract market was taken at all. Now some people said, oh,
• 12:55
  S2: this is just the cities looking after themselves at the
• 12:57
  S2: expense of the bush. Well, that was if you like,
• 12:59
  S2: the result, but it wasn't the intention. It was just
• 13:02
  S2: that the city works on contracts. And you're right, a
• 13:05
  S2: lot of the big miners and the big companies, you know,
• 13:08
  S2: the big industrial users of fuel also understandably have contracts
• 13:11
  S2: in place because security supply is so important to them. Um,
• 13:15
  S2: and so, uh, the spot market really failed to work
• 13:19
  S2: because the contracted market was taking up all the fuel.
• 13:22
  S1: Might just move into broader questions on how the oil
• 13:24
  S1: crisis will affect the green energy agenda and the green
• 13:28
  S1: energy debate. You said earlier this week, Chris, that the
• 13:32
  S1: oil shock was spurring a shift away from fossil fuels.
• 13:35
  S1: Does that not jar with the fact that the Prime
• 13:37
  S1: Minister has upended his schedule to head to Asia to
• 13:40
  S1: try and secure fuel that we do not have in
• 13:43
  S1: Australia because we've either not drilled or reduced our refining capacity.
• 13:46
  S2: No, I don't think so, Paul. I mean, I've seen
• 13:48
  S2: that argument run by some, uh, in politics and in media. Uh,
• 13:53
  S2: not at all though, in my view, because two things
• 13:55
  S2: can be true. And what I'm talking about is the
• 13:57
  S2: more medium to long term trend. Obviously, our first focus,
• 14:02
  S2: the PM's mind, has been to secure supply of fuel
• 14:08
  S2: to Australia, including the PM going to South East Asia
• 14:11
  S2: and including, you know, uh, my efforts and the foreign
• 14:14
  S2: minister's efforts and everyone's efforts. So that is 100% true.
• 14:18
  S2: We are focused on getting that supply in the short term.
• 14:21
  S2: That doesn't mean in the longer term, you can't make
• 14:26
  S2: the point that, um, renewable energy is if we, the
• 14:32
  S2: more we sort of transition to renewable energy, the more
• 14:35
  S2: sovereign is our capability. And as I said, Australia's not
• 14:38
  S2: the only country sort of saying this. Um, it was
• 14:42
  S2: a very strong theme out of the meeting with the
• 14:43
  S2: prime ministers and presidents yesterday. It's come up in all
• 14:46
  S2: my conversations with energy and climate ministers over the last
• 14:48
  S2: month that I have on the phone with them. Everyone's saying, well,
• 14:52
  S2: this is underlining why we're doing what we're doing. This
• 14:55
  S2: is a fossil fuel crisis, right? This is a fossil
• 14:58
  S2: fuel supply crisis. And, um, what's happened in Australia almost
• 15:03
  S2: inevitably is it gets dragged to the culture war very quickly. Um,
• 15:07
  S2: of people saying, well, this underlines the need for more
• 15:10
  S2: fossil fuels. Well I don't think that's the conclusion. Um.
• 15:14
  S2: Um it's just a, I think a very sensible calm,
• 15:17
  S2: moderate observation to say, um increasing renewables in the mix
• 15:22
  S2: is actually part of the solution, not the entire solution,
• 15:24
  S2: but part of the solution. And you know what, not
• 15:27
  S2: only I'm saying that I think Australians are saying that,
• 15:30
  S2: you know, you've seen a massive increase in EV sales. Um,
• 15:36
  S2: you've seen Australians proceeding at pace. I mean, 10% of
• 15:38
  S2: the world's battery capacity that was added around the world
• 15:42
  S2: in March was in Australia. Like, um, we'll soon hit
• 15:46
  S2: 350,000 home batteries. This is Australia since 1st July last year.
• 15:51
  S2: So this is Australians just getting on with it.
• 15:53
  S1: Would it not though. Sorry to interrupt you Chris. Would
• 15:55
  S1: it not be more honest to say that in the
• 15:57
  S1: long run, it adds impetus to the the case to
• 16:02
  S1: do energy sovereignty via renewables, but at least in the
• 16:05
  S1: short or medium term, given we rely so significantly on
• 16:09
  S1: diesel and other fuels, it also adds weight to the
• 16:11
  S1: argument that we need more fossil fuel sovereign capacity as well.
• 16:15
  S2: Well, look, I'm as I've said, I'm avoiding deliberately the
• 16:20
  S2: culture war on this because the question about whether we
• 16:23
  S2: should exploit more oil in Australia should be based entirely
• 16:25
  S2: on engineering and economics, not on cultural issues. Now, um,
• 16:30
  S2: so yes, we're open to that. But also also you
• 16:36
  S2: can make the case as I make that more energy
• 16:39
  S2: sovereignty for more renewables is also the case now. At
• 16:42
  S2: the moment, we're using 150,000,000l roughly of fuel a day. Now,
• 16:49
  S2: the the Queensland proposal, which we're very open to that,
• 16:54
  S2: you know, Premier Christopher has been highlighting recently with at
• 16:57
  S2: about 2.4 million litres a day now. Okay, fine. Great.
• 17:02
  S2: You know, that's positive, but let's not pretend it's going
• 17:05
  S2: to mean that Australia all of a sudden becomes sovereign
• 17:09
  S2: in oil production. And a lot of our oil has
• 17:11
  S2: already been exploited. And not all oil is oil's oils
• 17:16
  S2: ain't oils. Not all oil that we have is necessarily
• 17:19
  S2: suitable for our refineries. So it's more complicated and nuanced
• 17:22
  S2: than drill, baby, drill, right? That is just not a again,
• 17:25
  S2: I'm not I'm not opposed to more oil extraction in
• 17:27
  S2: Australia that replaces imports. On the contrary, all for it
• 17:31
  S2: if it stacks up. But let's look at each proposal
• 17:34
  S2: on the economics and engineering. Not through some sort of
• 17:36
  S2: culture war. Because, with all due respect, there are people
• 17:39
  S2: in politics and in, in, in commentariat who will take
• 17:43
  S2: any opportunity to say, ah, this, this shows that renewable
• 17:46
  S2: energy is not right and we should focus more on
• 17:48
  S2: fossil fuels. Any opportunity. I mean, I remember when Callide
• 17:51
  S2: Power Station exploded, David Littleproud was asked, what does this mean?
• 17:56
  S2: He said it shows the risks of relying on renewable energy.
• 17:58
  S2: I'm sorry, how does a coal fired power station exploding
• 18:02
  S2: show the risk of renewable energy? They'll take any opportunity
• 18:05
  S2: for the culture wars about this. Well, I won't I'll
• 18:08
  S2: focus on the facts. And the fact is that a sensible,
• 18:12
  S2: common sense approach would indicate more renewables is also good
• 18:16
  S2: for sovereignty and reliability.
• 18:17
  S1: Just on this newly powerful argument from your political opponents
• 18:23
  S1: on drilling for oil and gas. I was talking to
• 18:26
  S1: some energy experts yesterday to try and get a read
• 18:28
  S1: of all these individual projects. There's Narrabri, Taroom, as you mentioned,
• 18:31
  S1: the Great Australian Bight, and it feels like across the
• 18:33
  S1: board there is a combination of commercial reticence for various
• 18:37
  S1: financial reasons native title issues, federal environmental hold ups, local
• 18:42
  S1: concerns about pipelines, as you say, a more complex set
• 18:46
  S1: of hold ups and concerns about why we haven't seen
• 18:49
  S1: drilling in these areas. I know you're not the sole
• 18:51
  S1: decision maker because federal environmental laws, one thing you're not
• 18:54
  S1: even the minister in charge there, but your preference and
• 18:57
  S1: the pulpit that you have and where you would like
• 19:00
  S1: to see the country go on drilling has significant weight.
• 19:04
  S1: Is it your preference that we see more drilling in
• 19:08
  S1: some of these projects, and we see them up and
• 19:10
  S1: running to a significant degree, or is that not the
• 19:13
  S1: direction you think the country should push in?
• 19:15
  S2: Well, as I've said, I think I think each one's
• 19:16
  S2: got to be handled on its merits now. And you've raised,
• 19:19
  S2: I think, three there. Let's just quickly look at each
• 19:21
  S2: of them because I think it does illustrate a good point. Right.
• 19:24
  S2: So very quickly. Great Australian Bight as I've said publicly,
• 19:28
  S2: Matt Canavan had a go. Fair enough. Um issued licenses
• 19:31
  S2: for Great Australian Bight and I hand it back by
• 19:34
  S2: the company, I think it was BP and Chevron from memory. Um,
• 19:38
  S2: so this won't work. We can't make it work. It's
• 19:40
  S2: too geologically challenging. Okay, so fine. You had a go.
• 19:43
  S2: It didn't work. The geology hasn't changed. Um, on the
• 19:47
  S2: change of change of government. Uh, Narrabri is gas, not oil. But,
• 19:52
  S2: you know, it's got all its federal approvals. It's winding
• 19:54
  S2: its way through the courts on some challenges, but it's
• 19:56
  S2: got its federal approvals. Um, and I, you know, the
• 19:59
  S2: fact that all that gas would go to Australia, I
• 20:01
  S2: think is a good thing. Um, and then the Queensland
• 20:04
  S2: one that you refer to again, um, last time I
• 20:08
  S2: checked we hadn't received an environmental application. Last time I
• 20:11
  S2: checked with Murray Watt which was yesterday. No application had
• 20:14
  S2: been received. So you can't approve an application. You can't
• 20:17
  S2: fast track an application. You haven't got. A press conference
• 20:19
  S2: is not an application. And on all the work I've seen,
• 20:22
  S2: nothing would happen until the 2030s anyway. Now again, I'm
• 20:24
  S2: not opposed to it. Great if it can be made
• 20:26
  S2: to work, fantastic. But it's not going to solve all
• 20:28
  S2: our problems. So again, practical approaches. Yes, where it stacks up.
• 20:33
  S2: I'm very happy for exploitation of Australian oil to replace imports,
• 20:37
  S2: but I'm also happy, very happy with the transition to
• 20:42
  S2: renewable energies, replacing the need for some of it. You know,
• 20:44
  S2: our EV sales are high, but as a percentage of
• 20:47
  S2: the fleet, pretty modest, right? Because it takes so long
• 20:51
  S2: to turn the fleet over. But even the number of
• 20:54
  S2: EVs we have operating in Australia at the moment is
• 20:56
  S2: 15,000,000l a week of fuel use avoided, 15,000,000l a week.
• 21:02
  S2: That's not huge, but it's not nothing. Um, and that's
• 21:07
  S2: just with a fairly modest take up, let alone when
• 21:09
  S2: we get, you know, much higher sort of penetration of
• 21:12
  S2: EVs into the grid, into the system, um, which will
• 21:15
  S2: reduce fossil fuel dependency even more.
• 21:17
  S3: And Chris, on that question, let's zoom out a bit
• 21:20
  S3: on the economics of energy investment in Australia. I know
• 21:24
  S3: it must seem like years ago, but a few weeks ago,
• 21:27
  S3: the influential head of the International Energy Agency Fatih Birol
• 21:32
  S3: came to Australia in a case of unbelievably serendipitous timing
• 21:37
  S3: that such a such a big international figure would drop
• 21:40
  S3: into the Press Club in Canberra to give a speech, but.
• 21:42
  S1: Bigger than Meghan and Harry. So I say.
• 21:44
  S3: Well, not for me, but, you know, I have my preferences. Um,
• 21:47
  S3: he he made a.
• 21:49
  S2: Controversial.
• 21:49
  S3: Call. I'm not I don't even know what's happening outside
• 21:53
  S3: this room. But he had a really interesting little vignette
• 21:57
  S3: of what may be about to explode across global markets.
• 22:01
  S3: He said that 40% of the world's nuclear energy plants,
• 22:06
  S3: which are, you know, poisonously expensive for countries to build,
• 22:10
  S3: they were constructed directly in the wake of the 1970s
• 22:13
  S3: oil shocks. And this is not a guy who is,
• 22:17
  S3: let's be clear, a renewable energy advocate. He's not a
• 22:20
  S3: climate change advocate. He was talking very soberly about the
• 22:24
  S3: risks of fossil fuel dependence and how governments would react,
• 22:27
  S3: I believe is a fair characterization. Long story short, he
• 22:31
  S3: thinks that a similar wave of investment could be spurred
• 22:33
  S3: in renewables. What's your view on that? Just on not
• 22:37
  S3: necessarily the policy decisions that the government will make, but
• 22:40
  S3: how global markets will react and how investors in Australia
• 22:42
  S3: could react? Chris.
• 22:43
  S2: Yeah, yeah. Fatty, who's a good friend of mine, he's 100% right. Um, yes.
• 22:49
  S2: And I think that again, reflects my conversations with ministers
• 22:52
  S2: around the world, people, you know, again, in the culture wars,
• 22:55
  S2: people say, ah, this everyone's getting back to fossil fuels,
• 22:58
  S2: just not right. Just not true. People are getting on
• 23:01
  S2: with the job of renewable energy. I mean, the investments
• 23:03
  S2: in renewable energy now massively outpaces investments in fossil fuel,
• 23:07
  S2: new fossil fuels, massively, um, and nuclear, by the way.
• 23:12
  S2: I mean, we had more renewable capacity every few weeks
• 23:15
  S2: than gets added in nuclear all year around the world globally. Um, and, uh,
• 23:21
  S2: you know, something like 90% of new energy that's coming
• 23:23
  S2: on around the world is renewable. Um, and I think
• 23:27
  S2: that just gets higher, even higher. Um, because as I said,
• 23:33
  S2: every these energy crises are becoming more common, right? I've
• 23:36
  S2: lived through three international energy crises and I've been energy
• 23:39
  S2: minister for two of them, which I think there's no
• 23:43
  S2: causality in my view. Um, what it is, is a
• 23:46
  S2: reflection of is that the political.
• 23:48
  S1: Opponents.
• 23:48
  S2: Disagree. Oh I'm sure. Yes, yes. Well, everything's my fault
• 23:51
  S2: but um um but they're coming thick and fast, you know,
• 23:56
  S2: and uh, the, the fact is that when you're moving
• 24:02
  S2: fossil fuels around the world, there's supply chain challenges, you know,
• 24:05
  S2: at the moment, Straits of Hormuz, it might be Asia
• 24:07
  S2: one day causes that supply chain constraint. But I mean
• 24:10
  S2: it when I say, you know, nothing can interrupt the
• 24:12
  S2: flow of sun to Australia and the wind can't be
• 24:15
  S2: sanctioned and the sun's got to travel 150,000,000km to get
• 24:20
  S2: to earth. But it doesn't have to travel the 150km
• 24:22
  S2: of the Straits of Hormuz. So, um, now again, my
• 24:25
  S2: opponents say, oh yeah, but you know, you need to
• 24:27
  S2: get the solar panels and wind turbines from other countries. Yeah.
• 24:30
  S2: That's true. We've also got a future made in Australia
• 24:33
  S2: agenda so that we have more sovereign capability there. But
• 24:36
  S2: also once it's built, you know, it's operating and the
• 24:40
  S2: flow of energy can't be interrupted.
• 24:42
  S3: But Chris, look, sort of on the flip side of
• 24:44
  S3: the rosy renewables picture that's going to play out over
• 24:47
  S3: the long term, the government has lowered fuel standards for,
• 24:50
  S3: you know, slightly more polluting diesel and petrol to be sold.
• 24:53
  S3: It's subsidising refineries. It's subsidised motorists, you know, petrol costs.
• 24:58
  S3: What does that mean for the near term pace of
• 25:01
  S3: the energy transition. And does it make it materially harder
• 25:04
  S3: for Australia to reach its emissions reduction targets?
• 25:07
  S2: No, I don't think so. No, not at all. I mean,
• 25:09
  S2: these are these are temporary measures dealing with the immediate
• 25:13
  S2: crisis internationally, the right measures, you know, all you know, all, all,
• 25:17
  S2: all measures that I've put through, um government processes, um
• 25:22
  S2: to help us through, but we're in a transition, we're
• 25:24
  S2: in a transition, you know, and again, it's very simplistically that,
• 25:29
  S2: you know, I understand the question Paul asked before, but again,
• 25:31
  S2: the opposition says, oh, look, you know, you're out there
• 25:33
  S2: getting fossil fuels, the transition's exploding to a halt. No,
• 25:35
  S2: there's two two things can be true at the same time.
• 25:38
  S2: You can be dealing with an immediate short term challenge and,
• 25:42
  S2: you know, focused on getting more of the fuel we
• 25:44
  S2: need for Australians in today. At the same time as
• 25:48
  S2: progressing the medium term transition which is going at pace.
• 25:51
  S2: I mean, we just hit 50% renewables in the grid
• 25:53
  S2: last quarter of last year. Um, transport emissions came down
• 25:57
  S2: for the first time ever outside Covid. And that was before,
• 26:00
  S2: you know, the big uptake in EV sales. And that
• 26:03
  S2: will take time to roll through. Um, but we're making
• 26:06
  S2: good progress. There's challenges and headwinds, of course, but we're
• 26:09
  S2: making good progress. And I think this crisis again underlines
• 26:14
  S2: the need to keep going, doesn't slow it down.
• 26:16
  S1: Resilience has been one of the buzzwords that have come
• 26:18
  S1: out of this crisis, similar to the conversation out of
• 26:21
  S1: the pandemic. We've heard there's some thought being given at
• 26:25
  S1: a state level and federal level to change in regulations
• 26:28
  S1: to allow for many more long haul EVs on the roads,
• 26:32
  S1: which could have a significant effect on our reliance on
• 26:35
  S1: diesel in the long run. We know the technology is
• 26:37
  S1: moving really quickly on heavy EVs. How optimistic are you
• 26:42
  S1: on the role they could play in the transition, and
• 26:44
  S1: what are you looking at in terms of regulatory changes?
• 26:47
  S2: Yeah. So, um, well a lot of those regulatory changes
• 26:49
  S2: will be with Catherine King, not me. Um, in terms
• 26:52
  S2: of weight and things like that. And she's obviously fully
• 26:55
  S2: on board for the work that we're doing. Um, look,
• 26:59
  S2: heavy vehicle heavy haulage is a challenge for decarbonisation, but
• 27:02
  S2: not an insurmountable one. It will be slower and harder
• 27:06
  S2: than light vehicles, but not impossible. Uh, you know, there
• 27:10
  S2: was just the first EV delivery truck delivery from Sydney
• 27:14
  S2: to Canberra. Um, for example, um, there's companies doing great things,
• 27:19
  S2: including from Western Sydney on EV charging for trucks and internationally.
• 27:23
  S2: This is the direction of travel. Last time I looked,
• 27:26
  S2: more than 50% of the trucks sold in China are
• 27:29
  S2: EV trucks, more than 50% in, you know, um, uh,
• 27:35
  S2: the huge economy of China, um, are, are electric. So, um,
• 27:40
  S2: am I suggesting electric trucks can replace diesel trucks, you know,
• 27:44
  S2: holus bolus in the next 12 months? Of course not.
• 27:46
  S2: Is it the direction of travel for electric to do
• 27:49
  S2: more on heavy vehicles? Yes. Can we help? Yes. Are
• 27:53
  S2: we trying to help? Yes.
• 27:55
  S3: So is the government considering applying fuel efficiency standards or,
• 27:59
  S3: you know, bringing trucks into the national vehicle emissions standards
• 28:02
  S3: policy that it's got?
• 28:03
  S2: No, I mean, um, obviously we'll review EVs in due course,
• 28:07
  S2: but um, there's a reason why it only applies to
• 28:10
  S2: light vehicles. It's just heavy vehicles are just a sort
• 28:13
  S2: of different degree of magnitude and difficulty. But there are
• 28:15
  S2: other things we can and, and, you know, can do
• 28:20
  S2: to help with heavy vehicle decarbonisation.
• 28:22
  S1: What are those things? And I know they're not locked
• 28:25
  S1: in and not immediate, but what are you looking at?
• 28:28
  S2: Well, again, I'm not announcing policies, but you know, there's
• 28:30
  S2: a we've got work to do on charging. Um, but again, look,
• 28:34
  S2: the first big EV truck charging facility in Wilton, which is,
• 28:39
  S2: you know, between Sydney and Canberra has work has started
• 28:42
  S2: on that. So progress is being made.
• 28:45
  S1: And, and the regulations around weight and width.
• 28:48
  S2: Yeah. A matter for Catherine King more than me. Um yeah.
• 28:51
  S1: Just on fuel security. Also quite a lot of rumours
• 28:56
  S1: in the government that in the budget, part of this
• 28:58
  S1: resilience plank will be to up the fuel reserves from
• 29:01
  S1: the current month long reserve to somewhere a little bit higher.
• 29:05
  S1: We know you're not going to go anywhere near 90
• 29:07
  S1: because it costs too much. And you've been pretty clear
• 29:09
  S1: on that. But is there an argument to up those
• 29:12
  S1: stocks at least slightly or to a moderate extent over
• 29:16
  S1: the next few years?
• 29:17
  S2: Well, we're not announcing the budget um, today. Uh, you know,
• 29:21
  S2: I've said my immediate focus is immediate supply. Obviously, when
• 29:26
  S2: you get through any sort of major shock like this,
• 29:28
  S2: you look back and you say, what could be done better?
• 29:31
  S2: What needs to be improved going forward? Um, and the
• 29:35
  S2: budget is a fiscal event. Um, you know, we only
• 29:38
  S2: have two a year where you have opportunities to look
• 29:40
  S2: at things, but, um, my immediate focus is getting through
• 29:44
  S2: the coming weeks and months. Obviously we also look at
• 29:47
  S2: sensible things. You're right. It's very easy to say, oh,
• 29:50
  S2: we should have this many days and that and it
• 29:53
  S2: is again, 90 days onshore would be $20 billion over
• 29:55
  S2: four years. And, you know, and an ongoing, you know,
• 30:00
  S2: the petrol's got to be the petrol. You can't just
• 30:02
  S2: build a tank and leave petrol in it like it's
• 30:04
  S2: got to be moved through. It goes stale. So that
• 30:07
  S2: means you've got to have as much petrol as you need.
• 30:10
  S2: You can have a reserve, but it's not as simple
• 30:12
  S2: as saying, well just have unlimited reserves because the petrol
• 30:15
  S2: market just won't work like that. So it is a
• 30:17
  S2: complicated space. Is there sensible things that we can. You know,
• 30:20
  S2: lots of people come forward with ideas in recent weeks. Yes.
• 30:22
  S2: You'd imagine some of them might end up working. Some
• 30:25
  S2: of them won't. Um, and, you know, we'll continue to
• 30:28
  S2: look in good faith at proposals like that.
• 30:30
  S3: And Chris, could you just, you know, let's clear up
• 30:32
  S3: confusion in the public, I think, what are the options
• 30:36
  S3: for fuel security that the government has on its table?
• 30:38
  S3: You know, is it looking at helping private companies drill
• 30:41
  S3: for oil? What are the options that are on the table?
• 30:44
  S2: Well, I'm not going to pre-empt the budget. Um, you know,
• 30:47
  S2: we do support the two existing refineries. Um it is
• 30:50
  S2: in our national interest that they continue. The challenge for
• 30:53
  S2: refining in Australia is not environmental. It's not climate despite
• 30:56
  S2: again the attempt in the culture war to bring it in.
• 30:58
  S2: It's the fact that our populations, you know, not huge
• 31:02
  S2: by Asian standards. Um, one thing refineries need is scale. Um,
• 31:07
  S2: and the big Asian refineries just, you know, are very
• 31:10
  S2: efficient because they're so huge compared to the relatively small
• 31:14
  S2: Australian refineries. And even the six that existed were relatively
• 31:17
  S2: small by Asian standards. And so they had trouble competing
• 31:20
  S2: in that environment. Um, I think previous governments should have
• 31:24
  S2: done more. The Abbott, Turnbull Morrison government should have done
• 31:27
  S2: more to save the six that we had, at least
• 31:28
  S2: some of them. But I don't blame government policy for
• 31:33
  S2: the problem. I don't blame lack of government initiative for
• 31:37
  S2: stepping in to save them. You know, it would have
• 31:39
  S2: been better if they had stepped in when there were
• 31:41
  S2: 3 or 4 night wait till two.
• 31:44
  S1: Your role in the government is is intriguing. You cop
• 31:46
  S1: a lot of flak from the conservative press and your
• 31:48
  S1: political opponents. You know, some.
• 31:50
  S2: Can be triggering.
• 31:51
  S1: Yes. Yeah. And I think that partly goes to your
• 31:54
  S1: public style. You're quite aggressive in press conferences. You're pugilistic.
• 31:58
  S1: Perhaps that's required in the green energy debate. When there's
• 32:00
  S1: a contentious reform happening. You certainly change your tone at
• 32:04
  S1: some point in this crisis to just be a bit
• 32:06
  S1: softer and press conference. I think that's a fair observation.
• 32:09
  S1: Can you explain how you see your role leading the
• 32:12
  S1: government's green energy agenda? Do you see yourself as a
• 32:15
  S1: kind of shock absorber for the rest of the government. What?
• 32:18
  S1: Explain how you go about your public persona.
• 32:21
  S2: Yeah. I think they're all fair questions and observations, Paul. Um,
• 32:25
  S2: I guess a couple of things here. Firstly, it's a
• 32:27
  S2: controversial portfolio. You know, again, sometimes when I catch up
• 32:30
  S2: with my climate and energy minister mates around the world,
• 32:33
  S2: we compare notes and say, are you by chance the
• 32:36
  S2: most controversial member of your cabinet? And we all say, yes,
• 32:39
  S2: that's the nature of the job. Um, because it's, it's,
• 32:43
  S2: you know, on the left, there's strong views that we're
• 32:46
  S2: not doing enough. And on the right, there's strong views that,
• 32:49
  S2: you know, this is all nonsense and we shouldn't be
• 32:51
  S2: doing anything. And you've got to try. And I've got
• 32:53
  S2: to try and weave a course down the middle. And
• 32:54
  S2: that means you get plenty of free advice on both sides.
• 32:57
  S2: Every day I wake up and read the newspapers with
• 32:59
  S2: lots of free advice, and that's fine. Um, and again,
• 33:03
  S2: it gets dragged into culture wars very quickly. Um, I
• 33:07
  S2: don't when I, when I do see disinformation or misinformation,
• 33:10
  S2: I call it out. You know, I'm not one that, um,
• 33:13
  S2: sort of lets that pass And, um, we're in we're
• 33:17
  S2: in a political argument with lots of disinformation out there.
• 33:20
  S2: You know, opinion page after opinion page of climate denial, frankly. Um,
• 33:24
  S2: which I call out and that does lead to controversies.
• 33:27
  S2: And yeah, I don't take a backward step in the
• 33:29
  S2: political debate. You're right though. We've been dealing with a
• 33:31
  S2: very significant international crisis. So I've taken the view during this, um,
• 33:38
  S2: to try and calmly and methodically lay out the facts.
• 33:41
  S2: That's what I think ministers should do in this environment. Um, where,
• 33:45
  S2: you know, I've made the point that we haven't had
• 33:47
  S2: any constructive feedback from the Liberal Party. No policy ideas,
• 33:50
  S2: not one, which is a very different approach to the
• 33:52
  S2: one I took when I shadow minister during Covid, shadow
• 33:54
  S2: Minister for health during Covid, for example. I make that observation. Um,
• 33:58
  S2: but you know, it hasn't, I haven't seen my main
• 34:00
  S2: focus over the recent months is sort of making political
• 34:04
  S2: points rather providing, you know, factual updates, dealing with the
• 34:08
  S2: incoming inquiries. I've held a press conference almost every day
• 34:11
  S2: for the last month, almost every day for the last
• 34:13
  S2: month and a half. Not every day, but, you know,
• 34:16
  S2: a lot of days. Um, trying to be available to
• 34:20
  S2: provide that factual information and trying to do so, you know, calmly.
• 34:24
  S2: And there's been, you know, plenty of incoming during that period,
• 34:26
  S2: just calmly batted away.
• 34:27
  S1: Your government made a big promise before it came into
• 34:30
  S1: government in 2022 on reducing power bills by $275 over
• 34:34
  S1: a period of years. We know there was a major
• 34:37
  S1: land war in Europe that changed the trajectory on prices,
• 34:40
  S1: but there's been many elements of the green transition that
• 34:43
  S1: have been bumpy outside of the war in Ukraine. Do
• 34:46
  S1: you regret making the $275 pledge? In hindsight, was it
• 34:51
  S1: a mistake to ever assume that the transition would not
• 34:55
  S1: be this bumpy?
• 34:56
  S2: So, Paul, I mean, I guess what I'd say about
• 34:58
  S2: this is, you know, we've faced challenges. Of course we have.
• 35:03
  S2: Energy and climate were big issues at the last election.
• 35:05
  S2: Big issues in the 2025 election. Peter Dutton said he
• 35:08
  S2: wanted a referendum on energy and climate. And I was
• 35:10
  S2: fine with that. And the Australian people knew what we
• 35:13
  S2: were promised in 2022, and they knew what we'd been
• 35:15
  S2: able to deliver, and they knew what we'd tried to
• 35:17
  S2: do and what work we'd done. And the result is
• 35:20
  S2: there to see us. So the Australian people took all
• 35:24
  S2: that into account. It's energy. The only issue. The election.
• 35:26
  S2: Of course not. But was it a big issue? Yes. Um, and,
• 35:31
  S2: you know, uh, some people want to refight the 2025
• 35:34
  S2: election in 2028. Um, my view is we'll fight the
• 35:37
  S2: 2028 election in 2028. We fought the 2025 election. The
• 35:41
  S2: result we were, you know, grateful for.
• 35:44
  S1: But should you have ever made such a declarative promise
• 35:46
  S1: on that?
• 35:47
  S2: I'm going to leave that to that's probably a commentary matter,
• 35:50
  S2: which I'm going to leave you to make. Paul. I'm
• 35:52
  S2: a practitioner and a commentator. We made we we we
• 35:56
  S2: released modelling. I take you know, that was my idea
• 35:59
  S2: to do modelling. I don't regret that for a second because,
• 36:02
  S2: you know, you've got to remember in the election before
• 36:06
  S2: it was all about what's what's in the 2019 election,
• 36:08
  S2: a huge issue was what's the cost of your climate policy?
• 36:11
  S2: What's the cost of climate policy that Scott Morrison exploited?
• 36:13
  S2: And we tried to say, well, the cost of inaction
• 36:16
  S2: is greater than the cost of action, but it didn't work.
• 36:19
  S2: My view was we needed to point to specific policies
• 36:22
  S2: and specific modelling. We did that, the modelling was independent,
• 36:25
  S2: we released it, and again, I think the Australian people
• 36:28
  S2: cast judgement on all that in 2025.
• 36:30
  S1: And thanks again for joining us on a really busy
• 36:32
  S1: news day.
• 36:33
  S3: Thanks, Minister.
• 36:34
  S2: Good on you. Thanks, guys.
• 36:35
  S1: Thank you. You can read all of our political news
• 36:42
  S1: on our websites theage.com.au or smh.com.au. Today's episode was produced
• 36:49
  S1: by Josh towers. Our executive producer is Tammy Mills, and
• 36:52
  S1: our podcast were overseen by Lisa Muxworthy and Tom McKendrick.
• 36:56
  S1: Before we go, follow Inside Politics and leave a review
• 36:58
  S1: for us on Apple or Spotify. I'm Paul Circle. Thank
• 37:01
  S1: you for listening.