Issue 252, April 2026
Welcome to Easter, although there is precious little of good cheer on the national or international energy front. Where we will be by Christmas is an open question — except that it is hard to see our being better off financially, whether we are managing a household or a multinational manufacturer. To quote one commentator, “the de facto closure of the Strait of Hormuz is not merely another oil shock; it is a structural rupture in the global energy system—arguably the most severe in modern history." The head of the International Energy Agency, on a visit to Australia, has described it as “the greatest global energy security challenge in history,” (which is probably a bit of a stretch, allowing for the impact of world wars etcetera). He warns that restoring normal flows could take six months or longer. As during the COVID emergency, it will take time for many acute supply chain stresses to become fully appreciated. There will, of course, be some short-term winners, but, as a witty headline writer has put it, “some win. some lose, all sing the blues.” Long story made short: Australia has entered a period of significant energy uncertainty.
“A national crisis is a time for leadership” — Energy Minister Chris Bowen, addressing federal Parliament. “Do I think a fishing company not getting access to diesel is a crisis? Yes, I do.”
"I think Australians understand the international situation is very tough” — Bowen at a Canberra media conference. “International circumstances are uncertain. Let’s not kid ourselves that everyone knows exactly how the next few weeks are going to play out, because no one does.”
“I am engaging with my department in prudent contingency planning” — Bowen in Parliament question time in late March.
“We’re a long way from that” — Bowen in response to a media conference question about consideration of emergency powers to ration fuel.
"Energy Minister Chris Bowen has walked back comments that Australia isn’t facing a fuel crisis and urged against panic buying while simultaneously suggesting working from home is the ‘sensible thing to do’ to reduce consumption” — the Australian Financial Review on 23 March. "He conceded that the government had sought advice on fuel rationing in contingency planning.”
"There’s a lot of blame to go around here, and it goes back more than two decades” — Sky News political commentator Chris Uhlmann. “There are many governments over many years that have left us in the position that we are in now.”
"Households need to be better informed about the magnitude of the challenge we are facing” — International Energy Agency director Fatih Birol, visiting Australia. "The dark and long shadows of geopolitics are all over the energy sector now."
Promoters of renewable energy over fossil fuels in Australia and overseas have been quick to seize on the Hormuz crisis.
Australia’s Institute for Energy Economics & Financial Analysis opines: "Longer term, Australia has solutions available to improve its resilience to future oil market shocks, but few can offer protection at scale. Increasing domestic supply is not feasible due to the lack of commercial oil reserves and increasing stockpiles should be a priority but will take years.
"To increase energy security, Australia needs to reduce its dependence on oil throughout the economy. Electrification is the most promising solution as it is mature, cost-effective and can deliver reductions in oil imports at scale, which can be offset with domestically supplied clean energy.
"The Iran oil shock is the first to happen at a time when renewables and electrification offer a credible alternative. While costly, developing supply chains for low-carbon fuels is also likely to be required, especially in aviation and other heavy transport.”
Deakin University's law professor Samantha Hepburn agrees that, because of the latest energy shock, use of renewables and electric transport "will only become more appealing”. She asserts that "the realisation that a resource-rich country such as Australia is not distributing these resources effectively has created a political issue”.
Swinburne University professor Hussein Dia, warns that embracing renewable energy does not eliminate geopolitical risk for Australia.
"Power grids face cyber threats,” he points out, writing for The Conversation. “Critical mineral supply chains introduce new dependencies – and much of today’s solar panel, battery and EV manufacturing is concentrated in China.
“But there is a clear structural difference. Decentralised systems are harder to manipulate through supply chokepoints. Solar panels, once installed, generate energy locally. The vulnerability shifts from ongoing fuel imports to upfront manufacturing dependence.
"Reducing oil dependence is often framed as climate policy. But it is also vital to energy security and national security. Cutting oil use boosts resilience to shocks and reduces the leverage of other nations.”
National energy producers have reacted swiftly, and negatively, to reports the Federal government is considering higher taxes on the gas supply industry.
Australian Energy Producers CEO Samantha McCulloch says: "This would be the worst possible time for Australia’s economy and energy security to impose a new, retrospective tax on an essential energy sector.”
She warns: “Imposing higher taxes on Australian gas producers would stop investment in new gas supply, leading to gas shortfalls, higher energy prices and the closure of Australian industries that rely on reliable and affordable gas. The current surging petrol and diesel prices in Australia underscore just how important it is that we ensure Australia remains able to meet its own gas needs through secure domestic supply.”
McCulloch adds that the Australian gas industry is already Australia’s second largest corporate taxpayer, contributing $21.9 billion in taxes and royalties in 2024–25.
Meanwhile Fatih Birol, the International Energy Agency head on a visit to Australia in late March, used a National Press Club talk in Canberra to issue a diplomatic warning against a lunge for more taxes on energy suppliers. He said that "energy companies want a predictable set of rules and taxes."
Birol added: “Energy investors are like butterflies. When they are scared, they fly away. So you should be careful … that those companies feel that the investment framework is predictable for them. At the same time, it is important that the consumers, the citizens of the country, which are the real owners of the resource endowment, get their fair share from the profits that these companies are making.”
In the wake of a federal government statement that it will preference development of data centres to meet sustainable energy and water use criteria, SBS News has reported pushback warning that stronger steps are needed to prevent their demand on power grids at the expense of other consumers.
The government says in a statement that it expects data centres and AI infrastructure operators to underwrite new renewable power supply, pay their full share of new grid connectivity so costs are not passed to consumers or businesses and "support Australia’s energy transition through demand flexibility mechanisms."
SBS quotes Torrens University professor Seyedali Mirjalili from an Adelaide AI research centre as also warning the data units could “cannibalize” water supply.
Data centres consume about two per cent of grid-supplied electricity in Australia at present and that share is expected to triple by 2030 on current projections of an AI surge. The Australian Energy Market Operator has forecast that data centre energy demands could exceed the power used by the nation’s fleet of electric vehicles by 2030 — and, by 2035, the sector could consume 21.4 terawatt hours of power, just shy of the annual current consumption of Australia’s four aluminium smelters.
A recent report by Baringa consultants for the Clean Energy Finance Corporation has claimed that by 2035 data centre growth could increase wholesale electricity prices by 26 per cent in NSW and 23 per cent in Victoria, primarily driven by the perceived need for gas peaking generation.
Ascelin Gordon, a senior lecturer at RMIT University's Centre for Urban Research, also told SBS News that the incoming data centres could have long-term impacts. "There can be a big difference between what is proposed and what ends up rolling out on the ground 10 years later when the data centre's actually up and operating as well," he said. “All the power use and infrastructure to connect to the grid is going to drive up power prices for everyone in the long term.”
Gordon added that Australia could consider wider use of a star rating system for all data centres developed by the National Australian Built Environment Rating System to ensure they remain sustainable when built and in the long term.
Energy Minister Chris Bowen says it is important to get the investment settings right to keep the electricity system secure and prices low. "Data centres have great potential to support our grid and expand new renewable investment," he has told media.
Meanwhile the Australian Financial Review reports that data centre operators fear the Albanese government proposals are so vague they may send billions of dollars of investment to other countries. Belinda Dennett, chief executive of Data Centres Australia, told the paper it is unclear whether the government will create its own approval processes on top of existing State rules.
In a media statement, Dennett added that the government has failed to address a vast “invisible” energy usage by individual office servers.
Andrew Charlton, Assistant Minister for the Digital Economy, told the paper that the government does not want to set specific targets "because data centres were being built in different locations with different requirements”. But the government announcement emphasizes that it will only prioritise proposals for data centres and “AI factories” which use clean energy, hire Australians and don’t adversely impact communities they’re built in.
Industry Minister Tim Ayres added the government is “enthusiastic" for a nationally-consistent approach. “We're not going to have a race to the bottom, in particular on electricity and water use," he told reporters.
Australian Chamber of Commerce and Industry chief executive Andrew McKellar reacted that the government needs to explain why existing regulations are insufficient. “The imposition of numerous hurdles will add to the unattractiveness of investing at a time when Australia desperately needs more investment,” he said.
Adam Bandt, a former Greens leader now CEO of the Australian Conservation Foundation, said “if you want to build a data centre in Australia, you should be compelled to build the renewables and water recycling infrastructure to service it.”
Federal Opposition industry spokesman Andrew Hastie says the Coalition favours using "abundant fossil fuels and uranium" to power data centres and high-tech manufacturing.
In a crisis such as we in Australia are now enmeshed, the need for immediately effective short-term palliative action must ride, at government level, alongside effective energy planning for the medium and longer terms.
In this context, I was interested to read in the run-up to writing this newsletter edition a commentary published by the respected Lowy Institute.
Written by Vincent So, a former federal and NSW government adviser to national security and treasury ministers, it kicked off by observing that "as Australia debates electricity prices and the future of its energy system, the country is missing a deeper issue.” It added that: "In this predatory environment, great powers are testing limits, trade is weaponised and supply chains are leveraged for coercion. Energy has become a tool of statecraft."
So declared: "For a middle power like Australia – geographically isolated, economically open and strategically exposed – the convergence of energy security and national security should concentrate minds.”
This was a preface for raising the nuclear issue. So commented: "As Australia debates electricity prices and the future of its energy system, the country is missing a deeper issue. Nuclear power is no longer merely an energy technology. In a more dangerous world, it is also a form of sovereign capability.
"For decades, Australia has thought about nuclear power as though it were an argument about spreadsheets. Is nuclear cheaper than renewables? Is it too slow? Too risky? Too politically toxic? Those questions remain important. But they are not the only ones that matter. The world has changed. And energy policy can no longer be separated from geopolitics."
He went on to say: "Australia’s legislative prohibition on civilian nuclear power was crafted in a different era. It reflected a time when the global order felt stable, when American primacy seemed unchallengeable and when Australia could assume that ultimate security guarantees would endure without qualification. That assumption is now harder to sustain.”
So continued in this vein: "Australia’s refusal even to permit civilian nuclear development stands out among advanced economies. Removing the prohibition on nuclear power would not commit Australia to building reactors tomorrow. Nor would it diminish the central role of renewables in decarbonising the grid. Australia has extraordinary solar and wind resources and should continue to exploit them. But a diversified system is more resilient than a monolithic one.
"Nuclear energy offers reliable baseload power, low operational emissions and long-term price stability once capital costs are absorbed. More importantly, it anchors a country within an elite ecosystem of advanced technological capability.”
And he wound up thus: "Australia prides itself on realism. Realism, in this context, does not mean alarmism. It does not mean abandoning non-proliferation commitments or embracing militarisation. It means acknowledging that the world is less forgiving and more predatory than it once appeared.
"Energy policy is no longer simply about emissions targets or quarterly power prices. It is about resilience in a turbulent era.
"In a harsher world, sovereign capability matters. Removing the prohibition on civilian nuclear power would not be radical. It would simply allow Australia to participate in the technological ecosystem that many advanced economies already consider essential to their long-term resilience. It would be a recognition that optionality – in energy, as in strategy – is itself a form of power.”
For my money, this is fairly powerful stuff, the more so given the timing of its publication.
Keith Orchison
25 March 2026