Issue 253, May 2026
The energy-related turmoil of the past month, domestically and internationally, clearly still has far to run. The local repercussions, economically and politically, also are still far from fully clear. This month’s federal Budget may or may not provide some clarity on the domestic outlook — and, in time, public reaction to it and all the other current energy-related impacts on consumers, large and small, may provide some guide to the national political directions that lie ahead. As one of Energy Minister Chris Bowen’s vehement community critics has put it, "If the war with Iran has done nothing else, it’s given us all a real-world, real-time lesson in what truly runs our lives. A brutal reminder of which fuels actually matter and what government must do to protect the chain of supply and hence the livelihood of its people. But why do we need reminding at all? How can it be that such an energy-rich nation manages to find itself vulnerable in an energy crisis?”
“It’s energy, stupid. And that means all forms – oil, gas, coal, nuclear and the broad range of renewables. Energy rules everything from the economy and standards of living to border security and defence. It is the power of energy that fuels a nation’s strength; its absence signals national vulnerability. This is evident right now as the plentiful and cheap fossil fuels that powered a prosperous Australia have suffered from decades of ideology-led governmental assault, to leave us vulnerable to a serious deficit of available energy” – former federal parliamentarian Michael Baume, writing in The Spectator magazine.
“The fuel crisis caused by the war in Iran has resulted in a significant departure from Australia’s renewable-focused policy towards an emphasis on energy security” — investment manager Emanuel Datt. "The energy landscape is disrupted across multiple fronts.”
"This is a wake-up call for Australia to become more self-sufficient in fuel again” — MST Marquee energy analyst Saul Kavonic. “Renewables are simply not practical to replace jet fuel and diesel at this time.”
"We are a country that could be far closer to energy self-sufficiency. Instead we have chosen dependence – on imports, on fragile supply chains and on the goodwill of others in a tightening world” — Tom Switzer, presenter of podcast Switzerland.
"The energy transition was already in trouble before the Middle East erupted, beset by regulatory approval hold-ups, social licence snags and cost blowouts delaying the rollout of new wind, solar, and transmission line projects” — the Australian Financial Review in an editorial commentary. "Labor is now arguably paying the price for its one-eyed focus on renewables.”
“The world has changed. The emphasis Australia previously had on placing emissions reductions as a higher goal than sovereign energy control is completely changed” — federal Coalition defence spokesman James Paterson. “We should take advantage of every natural resource we have in Australia.”
"There was always an astonishing naivety about the consequences of blocking the use and development of fossil fuels” — economist Judith Sloan. "Far too much attention has been given to the electricity grid and the scope for turbines and solar panels to generate electrons to replace ageing coal-fired plants. Far too much emphasis has been placed on the scope for electrification while ignoring the vital and largely uncontested role of fossil fuels in primary iron, cement, fertilisers and plastics.”
“Australia has put up multiple barriers to any fossil fuel-based developments. Add in the false proposition that renewable energy is the cheapest form of energy and we have been led down a path of economic harm and insecurity” -- Sloan
"We need a short, medium and long-term plan for securing our energy independence. It will not be cheap or easy but the cost of not doing it could not be written more starkly and there are opportunities for a country with Australia’s deep energy endowment” — media commentator Chris Uhlmann.
"None of the 15 wind farms supported by the federal government’s flagship policy to boost the renewable energy rollout have begun construction, casting doubt over Labor’s target of 82 per cent clean power by 2030” — Australian Financial Review energy and climate reporter Ryan Cropp. “Of the 69 power projects that have successfully bid into the Capital Investment Scheme since December 2023, totalling 20 gigawatts, only 14, or 3.3 gigawatts, have begun construction."
"Part of the problem for banks and investors it that it is more expensive to build energy projects in Australia than other parts of the world, which ultimately affects investment returns” — Cropp. "The difficulties are particularly acute for projects that bid into the first major CIS auction in May 2024 because costs have risen significantly since then.”
"The current disruptions to fuel supply are forcing us to confront tough questions about the relationships between citizens, consumers, companies, governments and other countries” — Grattan Institute program director Alison Reeve.
"Are we comfortable with relying on others to do the right thing by us — whether that is refraining from fuel use so that others have access or using gas exports to leverage access to fuel? Are we willing to pay more to be protected from economic pain and logistical disruption? And should that cost should be born now, or kicked down the road for younger generations to bear?” – Reeve.
Australia relied on fossil fuels for 65 per cent of its electricity in 2024, with 46 per cent coming from coal, according to global energy think tank Ember.
In analysis provided to the media in April, Ember reported that fossil generation increased by 1.5 per cent in 2024 in the national power sector after six consecutive years of decline, "due to an unusual combination of increased demand and lower-than-average wind and hydro output due to weather conditions.”
Despite this increase, it added, the fossil share of power supply was 20 percentage points lower than in 2017.
Ember declared that Australia has the world’s highest solar generation per capita, over seven times the global average.
The Australian Energy Regulator is warning that energy debt and the ability of customers experiencing financial difficulty to repay debt and current usage costs "remain a concern
In a report released in April for New South Wales, Queensland, South Australia, Tasmania and the Capital Territory, the AER says that the average electricity and gas debt held by customers participating in a hardship program in these areas has increased significantly in the last quarter of 2025 compared with a year earlier.
As at the end of 2025, two per cent of residential electricity customers were on a hardship program with an average debt of $2,392.
“This amount is 22.8 per cent higher than the year prior. This,” the regulator declares, "deepens the challenge of repayment and further highlights the need for retailers to provide effective and timely support.”
The AER reports that retailers attribute the increase in average hardship debt to customers entering programs with owing money at higher levels and some having ongoing usage costs higher than repayment amounts.
It says the data also highlights a growing pipeline of financial stress. "Increases in early-stage arrears suggest more households are beginning to miss payments, raising the likelihood of a further lift in hardship program participation and disconnections over coming quarters if conditions do not improve."
More than 6,200 electricity customers were cut off supply during the last quarter of 2025 while average debts at the point of disconnection remain at more than $2,600.
The Australian Energy Market Commission says that changes it is considering to how power networks charge for use of the grid could save household consumers and small businesses as much as $6 billion over the next 15 years.
It will publish a final report on the issue in June.
AEMC chair Anna Collyer says the report will reflect how the energy system has changed over the past decade and “why pricing needed to catch up.”
Collyer adds: “Consumers are now generators, sending power back to the grid from solar panels and batteries and the way we charge for the network needs to keep pace with that change.”
Commenting on the development, The Australian newspaper says: “The stakes are significant – the reforms would re-allocate billions of dollars in network costs across households, lowering overall system costs but increasing fixed charges and creating clear winners and losers.”
Responding to media coverage of claims that the proposal could leave household owners of solar systems and batteries substantially worse off, federal Energy Minister Chris Bowen has declared that “any changes to power bill tariffs needs to balance the interests of those who have invested in solar and batteries and those who have not.”
He adds: “Reforms must deliver cheaper bills, better reliability and the modern grid and services we all deserve.”
Amid the national fuel crisis, the Queensland government has proposed fast-tracking of federal approval for development of Taroom Trough oil prospects in the first new such project in Australia for a half-century.
Taroom is located in the Bowen-Surat Basin in south-west Queensland in a largely rural area located between Chinchilla and Roma. It is home to Australia’s biggest coal mines but is under-explored for oil located about three kilometres below the ground surface. A dozen acquisition wells are currently being drilled there.
Tony Wood, a senior fellow at the Grattan Institute, told journalists in April that analysis suggested liquid resources from the area could be used to make petrol, diesel, and aviation fuel. “This is really important because what’s happened over the last 25 years is that, even though we do still produce a lot of crude oil in Australia, it’s of a nature that’s not very good for providing, in particular, diesel,” he said.
The federal government has signalled its openness to a streamlined approvals process under its Environment Protection & Biodiversity Conservation Act for the Taroom Trough project and says it is waiting for further information from Queensland.
The weeks leading up to the Federal Budget being handed down in May have seen a rowdy campaign for higher taxation in the natural gas sector — especially on exporters.
There are calls for a new 25 per cent tax on gas exports or an increase in the petroleum resource rent tax.
The gas sector and business groups are warning higher taxes will deter investment and threaten supply.
And the Labor Premier of West Australia, Roger Cook, is a vehement opponent of the tax proposal. He says he understands why seeking to extract more money from the gas sector has “superficial appeal” to voters but warned it will discourage future investment in the multibillion-dollar industry. “I don’t support it. I don’t think it will be good for Western Australia and I’ve made those views clear to the Prime Minister,” Cook told reporters in Perth.
The Business Council of Australia says a new gas tax will worsen Australia's supply problems. CEO Bran Black warns that more taxes will result in Australia's major overseas buyers of gas — Japan and South Korea — looking to "more welcoming markets" like the United States and Canada.
Black says Australia "needs more gas to support our energy transition, not less — and points out that “Australia’s existing tax system already captures higher returns when prices rise.”
He adds: "At a time when we are competing globally for capital, increasing the burden on business risks undermining investment, reducing supply and making Australia less competitive.”
The Business Council says that Australia’s gas sector already operates under a substantial tax burden, with recent analysis by Wood Mackenzie estimating effective tax rates of around 53 to 58 per cent across corporate income tax and the Petroleum Resource Rent Tax for offshore projects.
Resources companies via Australian Energy Producers have also hit back, saying oil and gas suppliers were expected to have paid about $21.9 billion in taxes and royalties in 2024-25.
Cecile Wake, head of Shell in Australia, told April’s Domestic Gas Outlook conference that the natural gas industry has invested more than $400 billion in this country since 2010.
“And it’s also Australia’s second largest taxpayer– contributing $21.9 billion in taxes and other government payments in 2025,” she said.
She issued a plea to the federal government to “beware of short-term easy solutions – such as the proposed windfall tax – that could fundamentally erode the investment case for the development of critical new energy supplies in the future.”
Wake’s warning came as Australian Energy Producers, the main lobby group for the petroleum industry, published a report it had commissioned from Wood Mackenzie. In it the consultants declared that imposing a 25 per cent export levy on LNG would result in an effective project tax rate of up to 83 per cent and erode up to 94 per cent of project value, making projects “un-investable”.
Woodmac added that the potential impact of the tax move put up to 20,000 petajoules of gas production and $70 billion in government revenue at risk.
You might imagine, with all that is going on here and there on the energy scene, that it would be easy to write a column like this, but I have to tell you that it isn’t.
It’s a bit like trying to fly a kite in a windstorm, really.
Having a go at the body politic for their multitude of failings on the energy scene for more than the past decade is an obvious rhetorical horse but it is being ridden by a multitude in Australia and overseas at present and I suspect you, dear readers, like me, are getting just a tad bored with it all — and that’s before one reads what those in government are mumbling to explain away ineptitude and inability to make things good for consumers.
To steal a recent line from Sir Dieter Helm, rather a lot of the current noise, in the media and on various platforms, is Orwellian — in the sense of four legs good, two legs bad. He published a commentary in Britain in April to the effect that it was beyond time politicians and others in the field replaced slogans with reasoned debate. He’s right, of course, but here in Australia I won’t hold my breath waiting for it to happen.
Speaking of Sir Dieter, I saw a BBC interview with him in April in which he made some points that are valid in Australia as well as Britain.
He was challenged by a BBC reporter for a “definitive answer” on the cost of renewables — something that Australia’s Climate & Energy Minister Chris Bowen rabbits on about endlessly to the effect that it is the cheapest way to go, as does the UK’s minister.
Helm’s response:"It all depends what you choose to measure.”
As Sir Dieter pointed out to the Beeb, focusing only on the cost of generating electricity misses a larger issue: the cost of the system as a whole.
Electricity has to be available all the time - not just when the wind is blowing or the sun is shining. That means back-up generation, additional capacity and a more extensive network.
As the system shifts towards renewables, far more capacity is needed - not just wind and solar, but back-up for when they are not producing. At the same time, the grid must also be expanded to carry electricity from wind and solar farms to where it is needed. Expanding the grid - building new pylons and power lines - pushes up network charges.
There are also "balancing costs", Helm noted, including payments to renewables farms to switch off when the system cannot absorb all the electricity they produce. “The direction is clear: partly because of renewables, the system is becoming larger, more complex and more expensive.”
Keith Orchison
25 April 2026