Interview with Patricia Karvelas, ABC News Afternoon Briefing

PATRICIA KARVELAS: Minister, welcome to Afternoon Briefing. MINISTER FOR CLIMATE CHANGE AND ENERGY, CHRIS BOWEN: Thanks, Patricia. Good to be on.

PATRICIA KARVELAS: Following Wednesday’s National Cabinet meeting, the Queensland Premier, David Crisafulli, told us here at the ABC that his state had been given a carve-out from the renewables policy, and he described the outcome as a big win. Do you disagree with what he said? CHRIS BOWEN: Yes.

It’s up to David Crisafulli to explain the claims he made to the people of Queensland, but all I can do is run you through the facts. The fact is that, as we said we would, its very clear, we’ll be legislating national standards for AI data centres. They’ll be in Commonwealth legislation, which will be put to the Commonwealth Parliament.

It’ll cover every state and territory without exceptions. The only change is that if a state-owned energy company feels that they can power a data centre cheaper than with renewables, they can make that claim to the Federal Government. We’ll have the Australian Energy Regulator look at it and assess it.

But the Commonwealth will decide that, not a state or territory. That’s very clear. So it’s nationally consistent standards, which will require data centres to be run by renewables, with peaking and firming that can be done by gas.

Same standards across the country, covering Queensland and the Northern Territory and everyone else, as was always going to be. PATRICIA KARVELAS: Okay, so why does he think he has a carve-out? CHRIS BOWEN: That’s a matter for him, but very clearly there’s no carve-out for Queensland.

It’s Commonwealth legislation, which will apply in every state and territory. Now, the Queensland Government says they can somehow have something which is cheaper than renewables. We say, okay, prove it.

They’ll have to put in a very detailed case, which the Australian Energy Regulator will assess and will make a determination. The Commonwealth will decide that, not the state. PATRICIA KARVELAS: Okay, so you’re saying that if they want to use gas or coal to power a big data centre, they’ll have to apply in each case under the legislation?

CHRIS BOWEN: Yes, that’s right, and they’ll have to prove that … PATRICIA KARVELAS: And explain to me that process. What does that look like? CHRIS BOWEN: Well, they’ll have to prove that it won’t put bills up.

I.e, they’ll have to prove that somehow, against every other situation, that coal or gas is cheaper than renewables. The Australian Energy Regulator will be tasked by the legislation to assess each application by a state-owned energy company. It’s a very high bar and needs to be.

We’re playing for very important stakes here. The energy used for these data centres is massive. We want to make sure that it doesn’t put upward pressure on bills.

We know if it was open slather in Queensland, they would just let data centres do whatever they want. The modelling shows it will push up energy bills, wholesale energy bills in Queensland, by 13 per cent. That’s not okay with us.

We won’t let that happen. We won’t let a race to the bottom. As we’ve always said consistently, in the Prime Minister’s speech to the University of Sydney, my speech at the National Press Club, we’re going to legislate Commonwealth standards.

I know, with respect, the Queensland Government doesn’t agree with that. We have a different view. We’re responsible for the energy system across the country.

This is a massive change to our energy system, so national legislation is appropriate. PATRICIA KARVELAS: Okay, and that national legislation, you’re saying that if they were to use gas or coal, they would be actually breaking the law. Is that what you’re saying?

CHRIS BOWEN: Well, yeah, the law will require data centres to bring forward new, additional renewable energy for their energy needs. Obviously, they can have gas for peaking and firming, you know, to cover any shortfalls in a contract. That’s okay.

We’ll consider all of that. That’s been consistent all the way along. But given that renewables are the cheapest form of energy, we want these data centres to bring forward new, additional renewable energy investment, not energy investment that was going to occur anyway.

That’s been, again, very consistent in all our public commentary. No change there. That was the situation going into National Cabinet.

It’s the situation coming out of National Cabinet. PATRICIA KARVELAS: Okay, I heard the Prime Minister speak after National Cabinet, where it was widely reported, as you know, that he was rolled. In those comments, he talked about flexibility.

That’s the word that he used in that press conference. Isn’t that flexibility, as we understood it until this moment, until today, that they could use coal and gas? There’s a lot of confusion here.

CHRIS BOWEN: No. No, look, and I’ve seen the reporting, and I understand some of the reporting. I’m not critical of journalists for the way they’ve reported it, but I do think it’s important that we clarify and confirm the situation that the Government was always going to legislate nationally consistent standards.

We’re still going to legislate nationally consistent standards. The Prime Minister said to the Premiers, okay, if you’re so confident that somehow or other fossil fuels can be cheaper than renewable energy, we’ll give you a process where you can prove that to be the case. The Commonwealth will decide.

That’s clear and key, that the Commonwealth decides, not the state, that it meets these standards. You need to prove it to the Australian Energy Regulator, which would be, I think, a pretty hard thing to do. But, you know, if they think they can do that, they can have a process to do that, and let’s see how they go.

PATRICIA KARVELAS: Okay, so let’s go back to that process, because I’m intrigued by this. They have a big data centre. They want to use gas to power the data centre - CHRIS BOWEN: As baseload.

PATRICIA KARVELAS: As baseload, of course, yeah. Baseload. Yep, for baseload for this new data centre.

They apply, and they argue in that application that it will be cheaper, that Queenslanders will get cheaper bills as a result. Do you tick it off then? CHRIS BOWEN: Well, the Australian Energy Regulator would have to be satisfied that’s true.

That’s not a matter for the state to argue that. Our regulator, our expert regulator, would need to be satisfied. They’ll do a very thorough analysis.

They’re a very good organisation, the Australian Energy Regulator. They have very high standards. They’ll put anybody through their paces.

And they need to be satisfied that that assertion that the Queensland Government made in that instance, in this hypothetical conversation, was true. If they’re not satisfied, then they wouldn’t sign that off. As I said, our expectation is… PATRICIA KARVELAS: With respect, if they’re putting forward a proposition, they run energy, as they’ve explained, it’s different to other states.

So, you know, the South Australian Premier, Peter Malinauskas, has told 7.30 - CHRIS BOWEN: Well, it’s not that different. It’s not that - PATRICIA KARVELAS : Well, he said it was different. Well, I mean, every energy system across the country has its - CHRIS BOWEN: Well, yes, they do have government ownership there, but the fundamentals of the economy are the same.

Gas is expensive. Gas is an expensive form of energy. One of the reasons why we’re seeing wholesale prices come down in Australia, and one of the few countries in the world where it’s currently happening, is that we’re using less and less gas.

You know, battery discharge is up 300 per cent in a year. That is driving gas out of the system at night. And those batteries are discharging at a cheaper rate than gas.

But gas has got an essential role to play because when you need it, you need it. That’s why we’re okay with it being used for firming, as a belt-and-braces type arrangement, to come in if necessary, but not as a sort of standard baseload. But again, if the Queensland Government has a view that they can somehow get super cheap gas which is cheaper than renewables, okay, that’s fine.

And, you know, very genuinely and seriously, make the case. Show the Australian Energy Regulator that’s true, and then we’ll accept that. PATRICIA KARVELAS: You’re saying you don’t think it’s true, and you don’t think it’ll pass?

CHRIS BOWEN: I think, generally speaking, renewables are the cheapest form of energy. That’s just not just established by AEMO and the CSIRO, that is just established by every study around the world. But again, if the Queensland Government, through their state-owned energy corporations, wants to make a case, the Australian Energy Regulator will put it through its paces.

PATRICIA KARVELAS: Is it fair that the Northern Territory, then, wants to use the energy from the Beetaloo Basin as its baseload power for data centres? CHRIS BOWEN: Well, the Northern Territory is part of Australia. Yes, it’s a separate grid, but they’re part of Australia, covered by national law.

Again, the same fundamental principles apply. Now again, if they have gas as part of the firming arrangement, perfectly fine, sensible. What I’m proposing here, what the Commonwealth will do, is pretty common sense Patricia, because we’re not saying it’s got to be no gas at all.

The gas comes in as an appropriate buttress for renewable energy, but ensures reliability. Perfectly common-sense approach. But not as baseload, unless they can prove that somehow, in that particular instance, it’s cheaper than renewables.

PATRICIA KARVELAS: Okay. And will this be application after application for different data centres, that these determinations will be made, or is there a sort of blanket? How does it work?

CHRIS BOWEN: Yeah. Case by case. Well, we’re drafting the legislation, as we’ve said.

We’ll put it out for consultation. It’ll be part of that broader AI data centre legislation which will go through the Federal Parliament. Energy is one part of it.

My portfolio is one part of it. Obviously, it’s part of the broader sweep. We’ll pull that out.

But yeah, on a case-by-case basis. PATRICIA KARVELAS: Are you playing bad cop to the PM’s good cop? Because he wasn’t quite so emphatic at the end of National Cabinet.

CHRIS BOWEN: Look, again, I understand when the Prime Minister’s dealing with many, many issues at National Cabinet, gun laws and various things, he’s going to cover the field. I saw the reporting. I think it’s appropriate that we clarify and make sure that people completely understand that.

I saw some of the claims being made by state leaders. Well, pretty important to correct the record and make sure it’s very clear: there are no carve-outs for any state or territory. Commonwealth law, under the Constitution, it must apply equally.

I mean, the Constitution prohibits discrimination between states, so there’s a constitutional issue if we wanted to. We don’t want to. We won’t be providing any special favours for any particular state.

This will be national law. The data centre uses electricity, which impacts on bills for everyone. If it’s in Queensland, or Northern Territory, or New South Wales, it impacts on bills, particularly if it’s on the eastern states, or within the NEM.

So we want to have nationally consistent rules. Again, let’s be consistent. For several months now.

PATRICIA KARVELAS: Yeah, and then Queensland and the NT said, no, we don’t. And the Prime Minister looked to be giving them concessions. You’re saying now they’re not going to get concessions?

CHRIS BOWEN: Queensland and the NT made that view clear in the Energy Ministers’ meeting, probably a month ago. I said, I understand that. I respect that.

We disagree. We’ll be proceeding. It’s not something which needs unanimity or consensus across the states, across National Cabinet.

It's Commonwealth law. We’ll need the support through the Parliament, which I’m confident in getting, and we’ll implement it as a national law. PATRICIA KARVELAS: And then what happens if they want to contest that law?

Could this end up in the High Court? This is obviously, you say, your constitutional power. They’re not happy about being told what to do.

CHRIS BOWEN: Well, I understand. The Constitution makes pretty crystal clear when there’s a conflict between state legislation and Commonwealth legislation, the Commonwealth legislation applies. PATRICIA KARVELAS: And you’re saying it’s your way or the highway, basically?

CHRIS BOWEN: Well, I’m saying it’s national law for the nation, which is set by national government, the national Parliament. And, you know, Queensland has an important role to play regulating the things that they regulate. We have decided that data centres and AI are so important for the country’s future that there’s going to be a national approach, and then we will do it through the national Parliament.

PATRICIA KARVELAS: Chris Bowen, it’s a really interesting topic, that’s for sure. Thank you so much for joining us. CHRIS BOWEN: Sure is, PK.

Look forward to chatting again soon. We acknowledge the Traditional Owners of country throughout Australia and recognise their continuing connection to land, waters and culture. We pay our respects to their Elders past, present and emerging.