PATRICIA KARVELAS: The Federal Government is warning of potential cyber attacks after Australia joined other western nations in imposing sanctions on individuals and businesses tied to the Kremlin. But you're probably more likely to feel the impact of an armed conflict in Ukraine at the petrol pump and in the cost of your energy bills. Oil prices surged towards $100US a barrel when President Putin order troops into eastern Ukraine and could go much higher if there's a full-scale invasion. Angus Taylor is the Minister for Industry, Energy and Emissions Reduction and my guest this morning. Welcome.

ANGUS TAYLOR: G'day, Patricia. Thanks for having me.

PATRICIA KARVELAS: Analysts have repeatedly said sanctions don't work on Russia. We've heard from two experts on the program this morning saying, you know, that sanctions have limited impact. Is Australia putting enough pressure on Moscow to reconsider its action?

ANGUS TAYLOR: Well, we'll continue to put pressure on Moscow. It's appropriate. We're not going to – it's not acceptable to have thugs and bullies in the global community doing the wrong thing. The Prime Minister has been very clear about that, Patricia, and we're taking action. We've said we're prepared to take further action if that's necessary. We stand by our allies in condemning what is happening in the Ukraine. My heart goes out to Australian Ukrainians who have relatives in the Ukraine and who are affected by this. It is a very tough situation. We stand by them. But we also stand by our allies in condemning the action and the imposing sanctions. And as the Prime Minister said, we will escalate as necessary those sanctions. They are starting in a particular area focused on individuals and organisations. But we'll continue to review the situation.

PATRICIA KARVELAS: The Russian embassy has said this morning that Australia's sanctions are xenophobic. What do you make of the use of the word xenophobic to describe our actions?

ANGUS TAYLOR: Well, it's propaganda. You would expect that from a country that is bullying and acting as a thug. I mean, that is what they are doing. And so we're not going to – we're not going to be influenced by that kind of language, Patricia. We'll do the right thing, and that is exactly what we're doing standing by our allies. Look, this is the kind of action internationally we haven't seen for a long, long time, arguably since the Second World War. It is certainly completely unacceptable, and we will continue to take appropriate action.

PATRICIA KARVELAS: Russia produces about 8 per cent of the world's oil. Could the international community ever seriously consider sanctions on the sale of that oil, or would that damage the global economy too much?

ANGUS TAYLOR: Well, we've got to be, you know, make sure that our sanctions have the right targeted impact. I mean, obviously, as you said in your introduction, there's been a significant impact already on global oil prices, Brent crude heading towards $100. And the key to that supply, we need more supply coming out. I know the United States is working hard to increase supply, as is Saudi Arabia and others in the Middle East. That is the key. And we've got to make sure that we are able to contain prices at the bowser as best we can. It's a global crisis so it's only global action that can influence that. We stand ready to work with the United States and other allies to make sure we've got all the supply we possibly can. But it does underscore why having major new resources like in the Beetaloo Basin, which has oil, that is available to get the supply to make sure we have petrol at the bowser at an affordable price. Because the truth of the matter is, whatever new technologies are coming forward, we're still going to be reliant on oil for many years to come.

PATRICIA KARVELAS: Some analysts say a war in Ukraine could push the price of oil past $120 US a barrel, possibly even $150. How realistic are those predictions?

ANGUS TAYLOR: Look, I'm not going to get into forecasting commodities. That's a tough thing to do, Patricia, and it's not what I do these days. I used to be more involved in that before politics, but not now. But there's no question that this is putting supply pressures on the world and people are feeling it at the pump. I filled up yesterday and I noticed the price, paying around $1.80. That's been the national average for the last few days. That's a price higher than we would all like to pay. It's why we do stand ready to take collective action if that's appropriate. I know the IEA is watching this closely. I've been in close contact with Dr Fatih Birol at the IEA and the Secretary for Energy at the United States on exactly these issues, and we'll continue to do everything we can to take those pressures away wherever it's possible.

PATRICIA KARVELAS: Foreign Minister Marise Payne was on the program yesterday. She told me she's in talks with European counterparts about potentially providing liquid natural gas to Europe to avert any shortfalls, but analysts warn Australia doesn't have the capacity to do so. How much is available?

ANGUS TAYLOR: Well, our export capacity is full. This is a recent phenomenon. If you go back a reasonably short period of time, we still had spare capacity for export. Most, or nearly all, of our exports are going up into Asia. But we are likely to see a pivot, if you like, particularly from the United States in its sales of gas from – which are currently a mix of Asia and Europe but a pivot towards Europe. And it means that our supplies up into Asia become doubly important. But our starting point will always be we've got to make sure the gas prices in Australia are affordable, that they are you forwardable for our big manufacturers as well as our households and small businesses. We are in an enviable position where the price of gas in Australia is 77 per cent lower than the international price at the moment, which is a remarkable situation. We haven't seen it before. And that's because we've got more supply coming out. But we are constrained in our capacity to increase exports. To the extent that the world pivots towards Europe and its gas sales, I think that is a likely outcome, and that will make our sales up into Asia doubly important.

PATRICIA KARVELAS: Australia struck a deal with the United States to be able to access some of its strategic oil reserves because we didn't have enough stored here. What happens if we need to access that?

ANGUS TAYLOR: Well, there's 1.7 million barrels. Ultimately we want to relocate those back to Australia. But, of course, they are there so that there can be a collective action across the world to get more supply into the market if we do run into security of supply issues.

PATRICIA KARVELAS: Sorry to interrupt, you say ultimately we want it relocate them to Australia. When is that going to happen?

ANGUS TAYLOR: Well, we need more storage. I mean, the thing that's constrained us is the capacity for more storage, which is why the government is spending $200 million alongside the private sector with an equivalent amount to get more storages into place. That's happening as we speak. We've made those allocations and they'll be built – they're being built as we speak. So once we get that storage in place, we'll be in a position to store more here in Australia. Just as we've shored up our refinery, remaining refineries in Brisbane and Geelong, just as we've imposed a mandatory stock-holding obligation 40 per cent higher for diesel to make sure we have the fuel we need. All of these are measures we have taken exactly for this sort of situation. And we will continue to pursue those initiatives. But we do have a strategic oil reserve, something we didn't have in the past. And that does give us the ability to work alongside our allies to release oil into the market. We've made it very clear to the IEA and to the United States we are prepared to do that. And we'll watch closely as this unfolds.

PATRICIA KARVELAS: Are you prepared to support Mike Cannon-Brookes's plan to replace AGL's coal-fired power stations with renewables and battery storage if he can guarantee pricing, supply and reliability?

ANGUS TAYLOR: Well, it's an 80 per cent bid by Brookfield, so I've been in discussions with Brookfield who are the lead partner in the bid. There's a long way to go on this, Patricia. The AGL board has rejected the bid. Ultimately they will not just need to try to get the board onside but shareholders. It will need to get ACCC approvals. There's significant issues there with Brookfield's ownership of AusNet in Victoria. Rod Simms has made comments on that yesterday.

PATRICIA KARVELAS: He has, but are you prepared to invest more to fast track upgrading the energy grid so it can take more renewables, which is a key component?

ANGUS TAYLOR: Well, we're doing it now. I mean, look, if you take a step back, we saw gaps in the market emerging initially from Liddell and the closure of Hazelwood, and so we've made some very significant decisions directly and indirectly working with the private sector. Our commitment to Kurri Kurri, the gas generator in the Hunter Valley, our work we've been doing alongside Energy Australia at Tallawarra in the Illawarra to get a new gas generator in place there the 2,000 megawatts coming from Snowy 2, the commitment to drive reforms through national cabinet for a capacity mechanism to make sure there is enough capacity in the marketplace, more than $500 million in funding for transmission projects. We are doing exactly this, Patricia. We saw it ahead of time. Labor put out a plan last where they said – late last year where they said there would be no additional – they assumed there would be no additional closures of coal-fired power stations. We've never assumed that. We've always believed these gaps need to be filled. And we ask the private sector to do the right thing by their customers.

PATRICIA KARVELAS: Well, let's go to a report out today – a fifth of Australia's fossil fuel facilities are emitting more greenhouse gas emissions than originally estimated, and blow-outs are showing that the government's safeguard mechanism is failing to control industrial emissions. This is pretty disturbing, Minister. What are you going to do to fix it?

ANGUS TAYLOR: Well, I'll take advice from the Clean Energy Regulator on this, and they've already said that in this report there are factual inaccuracies and analytical flaws. Now, I'll look forward to seeing more from Clean Energy Regulator on that. But I take a step back, Patricia, and I say our emissions are more than 20 per cent down since 2005. That's better than Canada and New Zealand, similar commodity exporting countries to us.

PATRICIA KARVELAS: Okay.

ANGUS TAYLOR: Well, these are the facts.

PATRICIA KARVELAS: Sure, but the facts are being contested by this new report out today.

ANGUS TAYLOR: No, no, they're not contested by this report.

PATRICIA KARVELAS: What work are you going to do to try and work out whether our fossil fuel facilities are emitting more greenhouse gas emissions than they are estimated when they get approval?

ANGUS TAYLOR: Well, I'll take advice from the Clean Energy Regulator who are the experts on this. And they've already said that there are factual inaccuracies and analytical flaws. But I make the broader point that the most important facts are what's happening to our emission profile. They're over 20 per cent down. We're on our way to 35 per cent reductions. We've improved our position every year since we've been in government on our 2030 and 2020 targets. We met and beat our Kyoto targets, and we've done that at the same time as we've brought electricity prices down in the last couple of years by 8 per cent for households, 10 per cent for small businesses. I mean, these are remarkable outcomes. There are very few energy ministers in the world that can boast those kinds of outcomes right now, Patricia.

PATRICIA KARVELAS: Okay.

ANGUS TAYLOR: And we have put ourselves in a position. It's hard work. We've made decisions that at times have been criticised and unpopular for some. But they have been the right decisions to get that mix we need of affordability, reliability and sustainability.

PATRICIA KARVELAS: Angus Taylor, thanks for your time.

ANGUS TAYLOR: Thanks, Patricia.

PATRICIA KARVELAS: Minister for Energy and Emissions Reduction Angus Taylor there. This is RN Breakfast.