FRAN KELLY: This week's high temperatures have seen demand for electricity soar around the country and with it, blackouts in Victoria, South Australia and New South Wales over the past fortnight. The Government says the outages highlight the need for more investment in reliable generation and it is now considering 66 projects that have applied for government support, government funding. This comes as a report by the OECD this week claimed Australia is not on track to reach its emissions reduction target by 2030 as it remains one of the most carbon-intensive economies of the group. The report also says Australia is one of the few OECD countries where greenhouse gas emissions have risen over the past 10 years. Angus Taylor is the Federal Energy Minister. Minister, welcome back to Breakfast.

ANGUS TAYLOR: Thanks for having me, Fran.

FRAN KELLY: Minister, 66 projects are seeking government funds under the Underwriting New Generation Investments program. What kind of projects are they?

ANGUS TAYLOR: There's a whole mix, Fran, and this is the point: our electricity system needs balance - it needs the reliable, 24/7 baseload power alongside the very significant investment in renewables that is happening right now. Over $15 billion worth of investment in the next couple of years in solar and wind-

FRAN KELLY: Okay, so who has applied?

ANGUS TAYLOR: Two-hundred-and-fifty per cent increase and so we've got a balance. It includes gas, it includes batteries, coal, waste-to-energy. So a very broad range of technologies just as we see increasingly a very broad range of technologies in our electricity system. It is that balance that we want to continue into the future. We know, you know- going for these one solution for the problem which many state governments have been pursuing - particularly in South Australia and Victoria - leads to the sort of outcome we saw in Victoria last week where 200,000 houses lost their power and we won't stand for that, Fran.

FRAN KELLY: The OECD says Australia remains one the most carbon-intensive economies of the OECD group. 93 per cent of the overall energy mix in this country is fossil fuel, coal, oil, or gas compared to an OECD average of 80 per cent. So you talked about needing a balance, will you take that into account when choosing what projects deserve government support?

ANGUS TAYLOR: Yes and, look, of course, that's one of the criteria. But look, let's look at the track record-

FRAN KELLY: I mean that's not balance - 93 per cent of the energy mix is coal, oil or gas, fossil fuel.

ANGUS TAYLOR: Well Fran, let's look at the track record here. Lots of people like to lecture Australia on emissions reductions, but we smashed-

FRAN KELLY: Well I don't know about lecturing, they do reports. That's what they do.

ANGUS TAYLOR: No, no, hang on, let me give the facts and the facts are very important here - we reached Kyoto One by 128 million tonnes, Kyoto Two by even more. A very significant exceedance of our targets. We are actually doing extremely well versus our Paris targets. We're down to the-

FRAN KELLY: Well not according to the OECD, it says we will not make them. We aren't on track to make them.

ANGUS TAYLOR: Let's go to the numbers. Let's go to the numbers. Ten years ago we had close to 3.5 billion tonnes of abatement we needed to find. We are now down to just over 300 million, 10 per cent of where we were 10 years ago.

FRAN KELLY: That may be, but the OECD says we are not on track to meet the Paris agreement, the levels we promised by 2030, and as you know and most people know now, the end of last year the figures showed that our emissions are going up, not down.

ANGUS TAYLOR: I'm telling you what the numbers are and we are down to the last-

FRAN KELLY: Well they were the numbers.

ANGUS TAYLOR: We're down to the last just over 300 million tonnes we've got to find - 10 per cent reduction each year. I'll tell you why this is happening, Fran - this is very, very important - the hardworking businesses, you know whether it's in manufacturing or small businesses out there and households in Australia, have been driving energy efficiency for very sensible often commercial reasons over a long period of time and we are seeing the bounty from that.

FRAN KELLY: Yes, and roof top solar is a big part of that.

ANGUS TAYLOR: Well, and - actually in the electricity grid you're quite right, in the electricity market, the National Electricity Market will reach the 26 percent Paris target by 2022. We put those numbers out late last year. So we are doing extremely well on this. There is more work to do it's not over, but I've got to tell you, Fran-

FRAN KELLY: How can you and other ministers keep telling me here and the listeners are onto this every time it happens that we're doing extremely well, we're going to meet the targets at a canter, when the emissions figures put out by the government's own department last year show emissions going up? How does that work?

ANGUS TAYLOR: Well I'm telling you what's happening-

FRAN KELLY: Emissions aren't going up?

ANGUS TAYLOR: What the targets are. The question here is-

FRAN KELLY: Is are emissions going up or down?

ANGUS TAYLOR: No, the overall – well, we have the lowest level of emissions per capita in 28 years, Fran. That is the truth. We're targeting 26 per cent and as I say we're down to the last 320 million tonnes - 10 per cent of what the task was 10 years ago. So they are the numbers. Now, the truth is many of those OECD countries haven't actually reached their target. They didn't reach the Kyoto target. We have. We have.

FRAN KELLY: Okay, let's not stray too far from your plans because that's what you want to talk about today. You've got this list of projects in - 66 projects. One businessman Trevor St Barker we know has reportedly presented a $6 billion plan for new HELE coal powered plants in Victoria and New South Wales. Given the assessment of the OECD and our energy mix I just talked to you about, will the government underwrite new coal power generation? Is that your plan?

ANGUS TAYLOR: So Fran when you come into these interviews I'm constantly asked do you love coal or do you hate coal? Do you like wind or do you hate wind?

FRAN KELLY: I'm not asking you that.

ANGUS TAYLOR: Do you like solar do you hate solar? You know what, I don't have a view about technologies being good or bad. What I have a view about is getting to the outcomes we want. The outcomes we want are lower prices, reliability - we don't want to see repeats of what we saw in Victoria last week and we want to reach those targets that we've been talking about.

FRAN KELLY: Yeah.

ANGUS TAYLOR: Now I am confident, extremely confident that electricity can do more than it's piece right now with the sort of mix we are seeing coming into the grid right now, but here's the challenge Fran - if we don't balance the huge amount of solar and wind coming into the system - 250 per cent increase in the next two and a half years - with 24/7 reliable power that doesn't rely on the wind blowing and the sun shining, we won't get the low prices, and we won't get the availability, the reliability that we need and Australian businesses deserve.

FRAN KELLY: I understand. I understand, but there are many ways to get that as you know, so my question to you is - is the government willing to indemnify, underwrite new coal power generation, indemnify new coal plants against the future risk of a carbon price?

ANGUS TAYLOR: I'm not going to do the banking for these projects on air. What I am going to say though Fran, is that we will pick the projects that will get us to our outcomes. That's what this is about, the outcomes. We're not going to get into a debate about loving or hating particular technologies, it's the outcomes we're focussed on. I am absolutely convinced we can achieve these outcomes but we need more of this dispatchable, 24/7 power.

FRAN KELLY: Yes, just to finish on this though the taxpayers' bang for the buck has to come in here and according to Labor, Mark Butler told us a few weeks ago that according to the Australian Industry Group the cost of indemnifying a new coal-fired power plant against carbon risk would run up to almost $7 billion. At the end of last year the Greens and Labor were planning to introduce a private members bill to stop the Government underwriting new coal-fired power. So even if you want to do this, is the Parliament going to let you?

ANGUS TAYLOR: Well look that's a question for the Parliament. The Parliament's got to decide whether it's interested in a reliable baseload power, the dispatchable power that's going to keep prices down and going to keep the lights on, and keep the wheels of industry turning Fran. That's a question that Parliament's got to answer. That's what we want to do and we're going to keep putting that forward. Now we'll work through the projects. We know exactly what the outcomes are that we want to achieve, we'll pick the projects that are going to best get us to those outcomes. We're absolutely delighted with this response - 66 submissions a broad range of different types of projects at different stages of development, and we'll work our way through them urgently because we need to. What we saw last week is completely unacceptable and as I say we will have the outcomes firmly in mind at all times - lower prices, keeping the lights on, and of course reaching those emissions obligations.

FRAN KELLY: We need to move on but just before I leave this, is there a budget item to this? How much money are you talking about?

ANGUS TAYLOR: The model here that's been put forward by the ACCC that we're following is one where the government underwrites.

FRAN KELLY: Yes okay.

ANGUS TAYLOR: So it's not a traditional funding model and it doesn't need to be, it doesn't need to be. The good news about this is despite lots of shrill cries from some saying no one wants to invest in electricity, there's lots of people who want to invest in our electricity market but they do need to know that the government is going to be there doing the right things, doing sensible things to make sure that investment gets reasonable returns.

FRAN KELLY: Minister, ahead of the next election in May we've seen a number of independent candidates say they're going to take on senior Government members citing lack of action on climate change as the government policy that spurs them on. One of them is a former Liberal MP, Julia Banks. It's a criticism that's resonated we saw with the voters of Wentworth late last year. When's the government going to acknowledge the community wants action on climate change?

ANGUS TAYLOR: Well I mean we've talked about this already for quite a while-

FRAN KELLY: And the Independents keep on talking about it.

ANGUS TAYLOR: And we've set a 26 per cent target, it's a strong target. We have the lowest levels of emissions per capita in 28 years. Look our track record on this is strong and at the end of the day what matters on this is not theoretical debate, it is outcomes. It is outcomes Fran, and the outcomes have been strong, we deliver. We don't make up these sort of aspirational targets some way down the track. If I look at Labor's 45 per cent emission reduction target, they have no pathway to get there and the reason they don't is they know they will have to trash industries, they will have to shut a big part of the electricity sector, they will have to shut down big parts of the transport sector, of agriculture and manufacturing in order to achieve that target.

FRAN KELLY: A number of your colleagues though-

ANGUS TAYLOR: We set a realistic target which we can achieve and we can achieve it, we've delivered and we'll continue to. And that’s what counts.

FRAN KELLY: A number of your current colleagues are indicating they'd like some more. We spoke to Tim Wilson yesterday, he indicated to us that he's looking forward to more being announced before the election and now Julie Bishop is giving a speech in Hong Kong today in which she will apparently say she doesn't see a solution to the current impasse on climate policy but investors need regulatory certainty, admitting quote: our party is divided on the issue of climate change and whether or how we respond. Do you welcome Julie Bishop airing these tensions internationally?

ANGUS TAYLOR: We agreed some time back, in fact Julie was a minister when we set our 26 per cent target, and there's strong agreement on that within the party and we're going to achieve it Fran, we are doing what we need to achieve it. Now what we're not going to do is go to a 45 per cent target because as the Business Council's told us that's is an economy wrecking target. That will see, and I was up in Central Queensland this week, we will see Gladstone shut, we will see MacKay shut down, the sugar growers, the aluminium sector, cement sector. If people want to shut these industries and lose regional jobs, put good people - hundreds of thousands of good people out of work then a high target, the sort of target that Labor is proposing, is where you go.

FRAN KELLY: Okay, Angus Taylor thank you very much for joining us again on Breakfast.

ANGUS TAYLOR: Thanks Fran.