In energy debacle, our biggest power failure is Chris Bowen

Climate Change and Energy Minister Chris Bowen. Picture: NewsWire / Jeremy Piper

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Chris Bowen must resign. The Minister for Climate Change and Energy has left Australia’s energy market worse off for every stakeholder.

Under Labor’s rule, prices are higher, breaking its promise of lower bills. Energy security risks are rising, with three near misses in as many years. Renewables growth has collapsed to near record lows, while fossil fuel investment has also fallen. Energy intensive manufacturing has been shutting down, shedding blue-collar jobs. Our reputation for investment has been decimated.

The government has lost control, despite assuming ever-expanding market powers. There is no confidence left, and new energy leadership is needed to move forward.

Everyone has been left disappointed. It’s one thing to balance policy trade-offs, and pick some winners leaving others as losers. But it takes a special level of ineptitude to leave virtually everyone as a loser under our current energy polices.

Ineffectual policies and unintended consequences over the past three years have seen the investment environment deteriorate, including for renewables. The aftermath has been less investment, less energy and higher emissions than there otherwise would have been. No part of our energy market is doing well any more.

Energy consumers are worse off facing higher bills; taxpayers are worse off as they fund uneconomic policies and subsidies; renewable companies are worse off, struggling to gain approvals and grid connections; fossil fuel companies are worse off amid approvals challenges and higher taxes, and; decarbonisation ambitions are worse off as Labor subsidises old coal generation.

There is a popular misconception that Bowen has championed renewables at the expense of fossil fuels. While fossil fuels have been hit hard, even the renewables industry has been left deeply disappointed. For those who want to see faster decarbonisation, Labor has disappointed by overseeing record subsidies to extend coal generation while seeing renewables growth collapse to lows not seen since 2017, according to the Australian Energy Regulator.

For those more focused on energy security and prices, Bowen has overseen load shedding, has ideologically excluded gas from Labor’s signature Capacity Investment Scheme (despite gas being the best form of capacity), and has driven the collapse in gas investment. The public debate has focused on the choices between renewables and fossil fuels, or the role of nuclear longer term. There is merit and trade-offs to both sides of these policy preference debates. But the root of Australia’s energy market problem lies in the execution of the details after the high-level policy direction has been decided. The government has failed in these details and delivery.

Various policies have been announced. Some have taken so long to implement the interim uncertainty has done more damage than any benefit the policy may deliver. Bowen’s signature Capacity Investment Scheme was announced with no details. So far, it appears to have crowded out more investment than it has attracted.

Labor’s green hydrogen initiatives have been deserted as uneconomic by the business community that initially cheered for them. Even the better-designed Safeguard Mechanism started off with more promise, but was compromised in concert with the Greens to make new manufacturing plans unviable, leaving blue-collar jobs hung out to dry.

In a single month, a rushed gas price cap policy undid Australia’s reputation, earned over decades, for investment certainty. In a spectacular backfire, gas prices have ended up higher. It’s been all pain for no gain. In an attempt to wind back the damage, Bowen has effectively now handed out exemptions to the policy for the entire market. He touts the 600PJ of gas supply commitments secured in return for giving these exemptions. But this is even less gas than was going to be produced before the policy was introduced! The result has been less gas, higher prices and more coal emissions.

Who are the winners here? Extraordinarily, this has fallen under Bowen’s remit as he has assumed overriding powers for gas that undermine Resources Minister Madeleine King’s jurisdiction. In the end, the elaborate lengths gone to in order to exempt everyone from a policy instead of just repealing it highlights how saving face appears to have taken priority over taking responsibility.

It’s been all headlines, and spin over substance and results. This is what can happen when a minister thinks he is the smartest person in the room. When he ignores advice and warnings from industry experts, including from his own departments. When he refuses to meet with key industry players. When he cancels meetings with industry stakeholders multiple times in a row, then presents a standoffish demeanour leaving industry wondering why it even bothered. When he announces major policy initiatives on the fly, while government employees – who should have advised on it – learn of it on the news. When unprecedented major market interventions that remove property rights are rammed through parliament a week before Christmas, without giving anyone time to read the policy, let alone consult on it or debate it (as happened with the gas price cap; our most communist legislation in a generation)

Australia has had some pretty ordinary energy ministers from both sides of politics over the past couple of decades – no political party has clean hands in our energy mess. But Bowen stands out for the sheer scale of the damage and apparent lack of self-awareness to acknowledge the problem, let alone fix it.

The worst thing about the anti-business policies he has overseen has been the lack of appreciation as to how hostile they have been viewed by the business community, and the damage to the investment environment. A government that isn’t aware of the problem it created cannot fix it.

In fairness, Bowen inherited a tough market without easy solutions. He does appear to recognise the right middle path has always been a focus on gas and renewables together, at least for the near term. But Bowen’s ambitions for the leadership have seen him pandering to the green fringe, despite not coming from the left faction. He has been duped into green hydrogen hype, become hostile to gas, while leaving the renewables rollout bogged down by endless approvals problems and infrastructure logjams.

He has ceded too much to the green fringe, which paradoxically has made environmental approvals unworkable for renewables and green infrastructure. Labor’s blue-collar base has been deserted in favour of green activists. There has been a paltry attempt to reverse course but the damage is done. To salvage some credibility on energy policy, Labor needs a new energy minister to focus on delivering for blue-collar jobs, household bills and economic growth, while keeping decarbonisation on a practical path. It needs a minister who will actually deliver more energy, rather than more media headlines.

Saul Kavonic is head of energy research at MST Marquee.