Issue 250, February 2026
The new year has begun as the past one ended for the energy sector and for consumers — with media and political wrangling about policies, user uncertainty and angst about costs plus many questions hanging over the so-called transition and the prospects for supply reliability. The Australian Energy Council is — yet again — calling for "an open and honest dialogue about the transition such as its cost and the speed of its delivery.” Australian Energy Producers, representing the petroleum sector, is — yet again — declaring the need for "fundamental reform of the east coast gas market to ensure Australian households and industry have access to reliable and affordable gas.” The federal Climate and Energy Minister, now seen by critics as heavily distracted by his new role in international climate politics, tells the media that his main domestic focus is “getting energy bills down and how that interacts with the great environmental crisis of our times.” In a new year interview he declared: “My number-one focus will be domestic policy. It’ll be bills, economic impacts from the dividends of our policies, job creation [and] and emissions reduction, all rolled up.”
"The way forward, we argue, is to acknowledge that no country today can know with confidence which technologies will ultimately deliver secure, affordable decarbonisation at scale, particularly in a world where costs, climate ambition, and geopolitics are all in flux” — the Lowy Institute. "Uncertainty therefore belongs at the centre of national energy strategy.”
"We have achieved a lot of progress in the transition, but the low-hanging fruit is gone. The focus is very much on execution, and there is no doubt delivering large scale wind farms and transmission is taking longer and costing more than anyone would have thought only a few years ago” — Frank Calabria, Origin Energy CEO.
"The view at the household level is more positive, and we have seen electrification take off in the areas of rooftop solar, home batteries and EV adoption. Looking ahead, collaboration across industry and government will be critical to achieving timely progress on projects and keeping the costs of the transition down” — Calabria.
"Decarbonizing Australia’s heavy industry is one of the most significant challenges of the energy transition. Sectors such as iron, steel and alumina are essential to the economy and everyday life, yet they remain among the hardest to abate. Their large emissions footprint, technical complexity and high capital requirements means progress cannot come from isolated efforts” — the Australian Renewable Energy Agency.
"Last year, investment was less than a third of that required to achieve Chris Bowen’s goal of 82 per cent greenhouse gas emissions-free generation by 2030” — Nick Cater, Menzies Research Centre. "The terms of the energy challenge must be reset, recognising there is no simple or cheap solution, just a series of difficult trade-offs.”
"While the resources sector supports Australia’s net zero by 2050 ambition, sacrificing energy reliability and affordability in the pursuit of near-term emissions reductions risked needlessly sending industry offshore and undermining global decarbonisation efforts” — Chamber of Minerals & Energy, Western Australia. "Energy costs across Australia have roughly doubled since 2020, threatening the viability of existing operations and severely impacting efforts to attract new strategic industries.”
"Government expectations that diesel emissions from Australian mining will fall over the next decade ignore the reality on the ground, where fuel consumption is rising as miners chase diminishing returns” — Institute for Energy Economics & Financial Analysis.
A senior business figure has stressed the importance of timelines in Australia’s planning of its energy transition.
In a media commentary in January, Elmer Funke Kupper, a former chief executive of the Australian Securities Exchange, warns: "Renewables are lowest cost when we take a short-term view and ignore the value of energy security and reliability. Change the timeline and the cost changes.”
Kupper adds: “The government remains confident that the renewable energy infrastructure will be delivered. The costs projected by the GenCost report will come true. All will be well. There are signs already that things may not be well.”
Kupper writes: "Australia’s energy transition requires a build rate that far exceeds historical experience. Delivery is falling short, particularly for wind energy and transmission infrastructure. Several wind generation projects have been cancelled and commissioning is running at one-sixth of what many transition pathways assume. Australia will not meet its 2030 renewables target. The outcomes in 2050 are highly uncertain.
"AEMO seems to agree we run a risk. It made it clear that ongoing delays will increase transition costs by tens of billions of dollars, erode benefits to consumers and present risks to reliability. Despite its own warnings, AEMO continues to fixate on 2050, assume renewables will deliver and reject nuclear energy.
"It is an approach compromised by ideology.
"When renewables fall short, the system will default to coal and gas for as long as necessary – possibly well into the 2050s. Australia is already extending the life of several coal-fired power plants."
He declares: "It would be much better to underwrite our economy with nuclear energy. If we start now, nuclear energy could be available by the early 2040s – which is when we know we will miss our net zero target. Nuclear energy is not an alternative to renewables. Quite the opposite. It is the combination of renewables and nuclear that produces a balanced, reliable and clean energy system.”
The federal Opposition is calling on the Albanese government to explain why Australia is the only member of the world’s top 20 economies to eschew nuclear power.
Opposition trade spokesman Kevin Hogan, speaking before the recent Coalition split, said: "“Every other major economy in the world, is building it or relying on it… or has some access to it. Chris Bowen and Anthony Albanese need to explain why. Labor needs to have a mature conversation on this issue.”
Nuclear for Australia spokesman Will Shackel adds: “Australia is going to have to meet the challenge of rising electricity demand and we need all clean energy sources in order to that. The government's set to miss its renewable targets and its emissions targets. So we need to have all clean energy options on the table, including nuclear power.”
The organisation’s chairman, Dr Adi Paterson, the former head of ANSTO who was made a member of the Order of Australia in late January, says the plan to rely on wind and solar power to meet the majority of eastern Australia’s future electricity needs is “doomed to failure.”
Australia’s largest coal-fired power is to remain in operation for at least two years more than previously announced.
Origin Energy, owners of the 2,880 megawatt Eraring plant on the shore of Lake Macquarie, says it has made the decision to “support supply through the energy transition.”
Origin’s CEO, Frank Calabria, adds: “Keeping Eraring operating until April 2029 provides more time for renewables, storage and transmission projects to be delivered. Good progress is being made on the delivery of new energy infrastructure, including major transmission works and projects like our large-scale battery at Eraring, but it has become clear the power station will need to run for longer to support secure and stable supply.”
NSW Environment Minister Penny Sharpe says Origin's decision "gives certainty to workers, the market and energy consumers across the State”. She adds that current energy security projections showed the State is expected to have "sufficient energy supply in 2029 without it thanks to new renewable generation and storage coming online.”
The NSW government has a target of 80 per cent renewable power in the grid by the end of the decade, but, says the Australian Financial Review, supply chain constraints, planning bottlenecks and broader energy market dynamics have all slowed the roll-out of new energy projects. "In December, the energy market operator warned that NSW would run the risk of blackouts if Eraring was closed in 2027 because critical equipment needed to keep the grid secure in its absence would not be ready in time.
Josh Stabler, managing director of adviser Energy Edge, told the paper that replacing Eraring requires a combination of wind, solar and gas generation and the much-delayed Snowy 2.0 pumped hydro storage project rather than just batteries. “If you went back five years and asked when should Eraring exit, you would say when Snowy 2.0 starts,” he commented. “The alignment expected there has not occurred and therefore Eraring has been delayed in order to reduce the supply gap between these two milestones.”
He said the decline in gas supplies in Victoria and the planned closure of the Longford facility in 2033 had also undermined the ability for gas generation to reliably step in the gap.
My friends at Quest Events, promoting their forthcoming Australian Domestic Gas Outlook conference to be held as March turns to April, have published an interesting promotional newsletter highlighting that east coast supply is — again! — seen to be at a turning point flowing from the Albanese government’s latest gas market review, "the latest step in a long line of interventions designed to tame prices and secure east-coast supply that also has the potential to become the enduring framework to replace today’s patchwork of emergency and quasi-emergency measures."
In it, the MST Marquee head of energy research, Saul Kavonic, is blunt about the risks if the scheme is poorly designed.
He says: "The big issue with any policy change is getting the details right. We can see how a new reservation policy can partly deliver the desired political outcome of lower domestic price pressure (albeit with some trade-offs). A wholesale replacement of the current regulatory mess with a new well-designed reservation policy could present a less bad outcome and put an end to the endless cycle of increasing interventions. But carelessness in the details could see the whole thing become a bigger debacle.
“The government’s track record so far has been one of messing up details on gas policy. If any new reservation policy doesn’t get the details right, and isn’t accompanied by removing supply-side obstacles, the market will face more interventions in the next few years, making the supply and price situation even worse.”
Kavonic sees the past decade of ad-hoc measures as a core reason today’s prices are elevated. “We don’t support either the current policy framework, or a new retrospective reservation, or the previous policy frameworks since 2015. We think the constant interventions in the market since 2015 – alongside other hostile policy changes regarding approvals – are the biggest cause of higher gas prices today,” he explains. “Less interventions, and allowing a supply side response, would have provided a sustainable solution by now. But we are where we are and the political imperative is to intervene again: it’s just a question of how, as government assesses ‘less bad’ options that offer a path of lower political resistance.”
The background to all this is a recent commentary by the Australian Competition and Consumer Commission saying that east coast gas supplies could fall well short of demand from 2028 "despite there being sufficient reserves and resources for at least the next decade”.
Kavonic recently told the ABC that the federal government "is going to be looking to achieve a 'goldilocks' price range which is probably around the $8 to $12 a gigajoule, that should be enough to provide some price relief for people at home and to keep most of Australia's manufacturing going.” He added: "But there are a few manufacturers that are very price sensitive and are facing other cost pressures, and they may need a lower gas price to remain viable.”
Needless to say, Australian Energy Producers, the lobbying body for the gas suppy sector is not a happy camper on this well-worn trail.
In its latest reaction, it says (growls?) "a significant new intervention in the gas market risks undermining the objectives of the gas market -review, which is focused on moving away from short-term fixes and restoring long-term investment certainty.” And “it also risks crowding out private sector investment and discouraging long-term contracting, the opposite of what is needed to improve gas supply and system reliability.”
In an interview with the ABC, Kavonic draws a parallel with federal Labor’s uncosted capacity investment scheme, designed to fast-track 40 gigawatts of large-scale renewable capacity by 2030, arguing that the latest gas initiatives are "a politicised and confidential process hidden from State balance sheets."
Kavonic also questions whether the mooted scheme may open the door for Victoria to subsidise LNG imports given its appetite for the supply source in recent years. “The Victorian government has been seeking ways to underwrite gas imports in order to fix their energy security risks, but has been struggling to do so due to a lack of funds and reluctance by some other states to bail Victoria out on this,” he says.
And on it goes.
Keith Orchison
1 February 2026