15 August 2019
LEON COMPTON: Angus Taylor is the Federal Energy Minister. He joins us this morning. Minister, good to talk to you this morning.
ANGUS TAYLOR: Thanks for having me, Leon.
LEON COMPTON: I want to play you a little bit of John Devereaux - he's an energy consultant who works out of Tasmania. This is John Devereaux talking with us last week.
JOHN DEVEREAUX: Currently Australia doesn't have a coordinated national energy policy. The energy revolution is happening at a scale and a pace that's simply almost impossible to keep up with. The language of investment of least regrets is now emerging.
[End of excerpt]
LEON COMPTON: Angus Taylor, his argument is we don't have a national energy policy that he can point to - is the criticism fair?
ANGUS TAYLOR: No, not at all, not at all. Look, we have phenomenal levels of investment happening in our energy grid right now - 2018 over $16 billion. The highest level of investment in renewables, in solar and wind in the world, times two. The next country was Japan and it was half of us, so extraordinary level of investment happening. The great challenge is to make sure that we've got dispatchable energy, energy when we need it - energy when the sun doesn't shine and the wind doesn't blow. That's why we passed through in December last year the Retailer Reliability Obligation. It's across the National Electricity Market and it means retailers have to provide enough dispatchable energy alongside the very significant reduction in emissions that's happening in that electricity market right now. That’s coming into place, and that came in on 1 July. That's an enormous opportunity for Tasmania, Leon, and this is why we're excited to be working with the Tasmanian Government on the interconnector and the Battery of the Nation, Project Marinus and Battery of the Nation because we do think Tasmania has a very important role to play, and these policies will encourage those investments. That’s why we're working on them now.
LEON COMPTON: Minister, that doesn't sound though like a coordinated energy policy. It sounds like sort of a bit-by-bit policy that might direct some energy investment into the future. At COAG recently did Ministers, including the Tasmanian Government, encourage you to bring back something like the NEG, the National Energy Guarantee?
ANGUS TAYLOR: The NEG has two parts to it, Leon. The first is a 26 per cent emission reduction target, which we will achieve probably eight or nine years ahead of time. That target was for 2030 - we're expecting to achieve it in 2021 maybe 2022. So we're going to achieve that very easily because we're seeing that record levels of intermittent renewables – solar and wind – into the system, which is why the second part of the NEG is the Retailer Reliability Obligation which was passed by COAG in December. So we have those two bits, they are happening, they're happening right now. Now our challenge is to make sure that record level of investment in solar and wind is converted to reliable power. That's where pumped hydro plays such a big role, because essentially what pumped hydro is – is a big battery. That's what Tasmania can do, it can provide a battery which is why this project is called Battery of the Nation, it can provide that storage and it's why we're working with the Tasmanian Government on it. So look, the objectives of the NEG will be met. As Liberals we don't believe in central planning more than is necessary to achieve the outcomes. That is our underlying belief because, you know, government should intervene as little as is needed to achieve the outcomes and that's exactly what we're doing in the energy system. Now it's true, it's a system going through enormous change with enormous investments happening now, record levels of investment happening now. We need to make sure that the interventions like the retailer reliability obligation are in place to ensure that we keep the lights on and we drive prices down, and we achieve that reduction in emissions which is naturally happening anyway.
LEON COMPTON: As I mentioned there's a whole host of ways Tasmania could help reduce the country's carbon emissions, could help solve dispatchable power problems on the mainland which are only going to grow, and of course could be lucrative for this state in generating revenue. Minister, we're told that the national rules that operate around any future Marinus investment, a second interconnector, means that the people that will benefit – overwhelmingly New South Wales – don't actually have to pay for the interconnector. How is that a good guide to investment?
ANGUS TAYLOR: Well that's not necessarily right, I'm not sure who’s given you that advice.
LEON COMPTON: I've got really senior people in a range of areas telling me that.
ANGUS TAYLOR: I can tell you that's not necessarily right. It depends how it's structured which is why we are doing the work now to ensure that this is done the right way. It must be done the right way. Look, the beneficiaries should pay - there’s no question that is absolutely a sensible, appropriate principle. Now actually, the modelling tells us that the biggest beneficiaries, in terms of the customer beneficiaries of the Marinus Link and Battery of the Nation will be the Victorians. The reason for that is they have closed coal-fired power stations - I would argue prematurely. It's not to say that our coal-fired power stations are going to last forever, but the timing has to be right. They are left in a very, very difficult situation. This summer will be very tough. This is the great opportunity for Tasmania and it's where Tasmania can play a very, very important role, as you said in your introduction, and I think you're absolutely right. On top of that we believe that these projects – Marinus, which is the interconnector and Battery of the Nation, which is the pumped hydro projects on the dams and pipelines in Tasmania – can add about 3,800 jobs as well as add billions to the economy.
LEON COMPTON: Minister, I'm told that the Australian Energy Market Commission, the regulator, has rules in place that does not allow for Victoria and New South Wales to pay their fair share for any new interconnector development, that it'll have to be split between Victoria and Tasmania. That is going to mean Tasmania is at risk of carrying the economic can for something that will benefit the mainland, and will also be a disincentive to the project happening at all.
ANGUS TAYLOR: Well that depends how it's done. That is actually not correct.
LEON COMPTON: They are the current rules.
ANGUS TAYLOR: Well they’re not the current- it depends how it's done. Now, I'll get technical for a moment. If it goes through the RIT-T process, then an allocation is made between the states. If it's outside of the RIT-T process – which is the regulatory process – then it is done on a commercial basis. So, look it depends how it’s done is the answer. We are doing the work right now, we’ve put $56 million in to do exactly this work, to work out exactly the appropriate way of doing it. But let's be clear here, I mean this is a great opportunity for Tasmania. That's why we're excited to be working with the Tasmanian Government on it. I think it is a project that deserves very, very strong support from the Federal Government and we've been giving it exactly that. It needs to be done in a fair way. I completely agree that the ultimate beneficiaries of the network, the customers who use the network, should be paying for the usage of that network. That's a very sensible principle and we’re in strong agreement with the Tasmanian Government on that principle. It's also important that we do everything we can to make sure that Tasmania does well out of this, and we think it can. As I said 3800 jobs, about $7 billion of economic impact across Tasmania and they are fantastic outcomes for Tasmania because it is sitting on a very valuable resource at this time.
LEON COMPTON: On Mornings around Tasmania Angus Taylor is our guest this morning, Federal Energy Minister but also the Federal Emissions Reduction Minister. Minister, just a final question for you this morning – how does it feel seeing Pacific Island nations at the moment really critical of our country and imploring us to do more to reduce our emissions, and looking at rising sea levels lapping around their shores as they do it?
ANGUS TAYLOR: Well, we’re 1.3 per cent of global emissions, so the crucial thing is we do our bit and we encourage other nations to do their bit – and we are doing our bit. Our 26 per cent emission reduction target is stronger than most in the world given the Australian economy and the Australian population.
LEON COMPTON: But you accept that they don't see that? I mean, they simply don't see that, they don't think we're doing our bit. They think that we're sort of rorting or interpreting to suit us, our Kyoto obligations, in ways that don't mean real emissions reductions - that's their perspective.
ANGUS TAYLOR: Well Leon, I focus on the facts. The facts are that we are doing our bit. I mean a 26 per cent emission reduction target is higher than most countries in the world given our economy. It's an absolutely appropriate target. We achieved our Kyoto commitments, our 2012 Kyoto commitments easily. We’ll achieve our 2020 commitments by 367 million tonnes which is a very significant overachievement. Australians deserve enormous praise for the work that's been done on energy efficiency, the investment we're seeing in cleaner electricity technologies that I talked about a moment ago. I mean, we are actually doing extremely well by global standards. Now, it's understandable that our neighbours are focused on their neighbours, I mean that's how the world works. But the truth is the facts are very clear - we have strong targets, we’ve overachieved on our historical targets unlike many other countries in the world, and we should be proud of those achievements. I'm sure the Prime Minister Scott Morrison will relay those messages in the Pacific.
LEON COMPTON: Minister finally, you’re recently re-elected, talk about the pathway with us now for Tasmania to think about, and what federal support you'll offer, for the discussion around new wind that's going on by the day, some of it jumping out of the ground in central Tasmania even as we're talking this morning, the conversation about the second interconnector and the prospects for investment in pumped hydro. What do those conversations look like? What specific timelines are there now in your mind for those to unfold over the next couple of years?
ANGUS TAYLOR: The really immediate timeline is the final feasibility and business case assessment on the interconnector which is coming in December. So we'll assess that when that arrives. That's a very important milestone because that's right on the pathway to getting these investments to proceed. We're also working very closely on the Battery of the Nation project with our underwriting program. We're underwriting dispatchable generation into the system. We need more reliable generation alongside the solar and wind coming into the system. Battery of the Nation is in that process and we're working through that assessment as quickly as we can as well. Both of those things are happening in parallel and I'm sure we'll have more to say as that work comes to its natural closure.
LEON COMPTON: Appreciate you coming on this morning.
ANGUS TAYLOR: Thanks for having me Leon.