GERALDINE DOOGUE: State and federal energy ministers are gathering in Perth today for their first COAG meeting in nearly a year. Top of the agenda is the reliability of the electricity grid and a plan for a National Hydrogen Strategy. Angus Taylor is the Minister for Energy and Emissions Reduction and he's joining us on the line from Perth where it's very early. Minister, thank you for joining us.

ANGUS TAYLOR: Thanks for having me Geraldine.

GERALDINE DOOGUE: Now we know hydrogen is important but given it's been a year since the last COAG energy meeting, many might say it's more important to be focusing on implementing a national plan for our energy grid than prioritising hydrogen.

ANGUS TAYLOR: Well both matter, Geraldine, and we're quite capable of doing both. In fact we've done an enormous amount through COAG in the last 12 months including putting in place on 1 July the Retailer Reliability Obligation. Of course, reliability is an enormously important issue for all Australians, making sure we have enough firm supply, reliable supply of electricity in our electricity grid is enormously important, and not only shores up reliability, Geraldine, but also puts downward pressure on prices. So that's been the focus for the last 12 months and it'll certainly be a focus today. But the longer-term issue of how we make sure new technologies emerge in Australia and are deployed in a sensible way and we take advantage of those, like hydrogen, is also important for all energy ministers and will be part of the discussion today.

GERALDINE DOOGUE: And this is where the Chief Scientist, Alan Finkel, will be presenting. And, I mean there's a lot to learn about this, but there's already discussion as to whether it effectively uses green hydrogen or it becomes green hydrogen from renewable sources or brown hydrogen from fossil fuels. Do you have views on that?

ANGUS TAYLOR: From the start the strategy work has been focused on a technology neutral approach. It says look, there can be many different fuel sources to produce hydrogen. It offers enormous opportunity in transport, electricity generation, in energy for manufacturing not only in Australia but also to our north in Asian countries like Japan, and Korea, and China. We want it to be technology neutral - that's been the approach that Alan Finkel has taken from the start. Whilst it's not going to happen overnight, we do think there's enormous potential here. We've already invested over $140 million in hydrogen projects across Australia including a $500 million project with some of our funding and funding from Japan and elsewhere in Victoria, and we want to keep going down that path, building what is potentially a very significant industry for Australia.

GERALDINE DOOGUE: What difference do you say a national plan for hydrogen would make to our grid and to power prices?

ANGUS TAYLOR: This is both an export opportunity and one domestically and over time we need to find new technologies that can contribute to our energy system, that has a potential to be low emissions, and that have the potential to put downward pressure on prices and keep the lights on. I mean one of the great virtues of hydrogen is it's a way of storing energy which can be low emissions energy, and of course storing energy is enormously important in an electricity grid. That's why we're investing in Snowy 2.0 which is the equivalent to a very big battery in our electricity system, and hydrogen can play that storage role as well. It's why the Japanese and Koreans are particularly interested in hydrogen for their electricity system, just as we are for ours.

GERALDINE DOOGUE: I'm just going to come back to that in a moment, but were you excited then by the tech billionaire, Mike Cannon-Brookes this week speaking about the thing he dreams of - the $20 billion project to build the world's largest solar farm and to export that to Singapore, this huge engineering project. And he's already starting to get some money for it - 150 times bigger than the world's biggest battery is all part of the plan. Does that excite you?

ANGUS TAYLOR: I think private sector investment in our energy system is a good thing, we want to see it, and that's exactly what we're trying to encourage, Geraldine. I mean when we look at hydrogen, it's much earlier stage than other technologies but we are seeing very significant private sector investment, just as we're seeing it in that project you just mentioned and that's what we want to encourage. We want to encourage the private sector investing in our energy system and making sure that we're not just capturing the opportunities to make sure we have lower prices and reliable electricity at home, but we're also seeing these export opportunities as well.

GERALDINE DOOGUE: Now though, a new report published today by The Australia Institute says that there is a lot of hype around global demand for hydrogen and it might be overstated. That estimates for demand for Japan for instance are 11 times higher than Japan's official targets. So how sure can we be that there will be solid appetite for our hydrogen?

ANGUS TAYLOR: I think we can be very sure that over the coming years in countries like Japan, and Korea, and China, and elsewhere, there'll be enormous demand for affordable, reliable energy sources - that we can be very, very sure of because there already is enormous demand and we are a very large exporter of affordable energy sources to Japan, and Korea, and China, and elsewhere. So that will continue. Now the real question is which technologies and which fuel sources are going to provide that energy to the world in the coming years? We have to play in this space, we have enormous opportunity to be a major exporter of energy in the future just as we have been until now and will be in the coming years. And hydrogen is of enormous interest to these countries. I was in Japan earlier this year and it was very clear to me that the interest from the private sector as well as the government is very high, just as it is in Korea.

GERALDINE DOOGUE: But I mean 11 times higher - what do you think of those estimates? I might add also from The Australia Institute, Richie Merzian told AM, he's the climate and energy director there, that rushing into the market now means using fossil fuel hydrogen and that that is really emissions intensive. And again, in terms of educating people about this, is that so and is that seen to be a temporary strategy?

ANGUS TAYLOR: It needn't be. This is the whole point about hydrogen is it's a fuel source where you can use low emission feed stock or you can use higher emission feed stock, you get to choose. And our approach to this is to recognise that over time, the emission level of any feed stock will come down, there's no question about that it should come down. That's what customers will want, and of course we have to establish an industry as we go down this path that is capable of delivering lower emissions hydrogen. And part of that, Geraldine, and Alan Finkel has made this point, it's very important that we certify any hydrogen we produce to make very clear what the emissions intensity of it is. Customers will, we believe, over time pay more for lower emission hydrogen and we want to be participating in that opportunity as and when it emerges. And look, it's not going to happen overnight but you don't build industries in new technology areas at the last moment. You have to be working on this over a long period of time to build up the capability, to build up the facilities. We've got to get the costs down to make sure it's as competitive as other fuel stocks but we do believe this is worth investment and we are making real investment now.

GERALDINE DOOGUE: Now you have announced a plan to start making bilateral deals with individual states on energy but only those you see as ‘collaborative’ and that bring something to the table. What kinds of projects are you working on here?

ANGUS TAYLOR: Well look, there's a whole range of ways that state governments make an enormous contribution to an affordable, reliable, electricity grid and an affordable, reliable source of energy for households, small businesses and industry. They of course are crucial to planning approvals, they provide funding to many energy based projects, they're members of COAG which is the sort of multilateral group across the states and federal government that make decisions on energy. So they are very, very important participants in our energy system and in some cases they own the energy assets - in Queensland and Tasmania for instance - they own most of the energy assets. So it means that it's very difficult for us as a Commonwealth Government to solve the energy problems we face and capture the energy opportunities we face as a country on our own. We need collaboration and cooperation with the state governments.

GERALDINE DOOGUE: But not ones that are just friendly. That's what people have said, I mean-

ANGUS TAYLOR: Well no, it's not a matter of being friendly - it's a matter of actually having sensible policies. I mean, that's what matters.

GERALDINE DOOGUE: But who doesn't then? I mean why not say I'll work with all states, why put this caveat on it?

ANGUS TAYLOR: Because we want states to have the right policies. We want states to have policies in place that are going to put downward pressure on energy prices, that are going to shore up reliability and are going to work with us in a sensible way to reduce emissions without imposing large costs on the economy or taking out large important sectors of the economy. I mean that is how cooperative federalism works. It's not a new idea. It's been around for a long, long while. We think there's enormous opportunity for state and federal governments to work together. As I say, it's very difficult for us to solve some of the challenges we face on our own. We need state governments to be working with us and the signals are good. There's enormous amounts of-

GERALDINE DOOGUE: Well, they're mostly good. I mean the New South Wales Energy Minister, Matt Kean has dropped his state's push for a National Energy Guarantee, the NEG, in light of a deal he struck with you. But I notice the Queenslanders are also using today's meeting to push for the state's potential deals with the Commonwealth, saying they're always bailing out the southern states. So you know, you're going to have to walk through all this aren't you?

ANGUS TAYLOR: Well look, we've got to work with states to get good outcomes but the states have got to come to the table with realistic contributions, and they've got to work in a collaborative way that's going to deliver a good outcome. I mean there is enormous potential for us to work together collaboratively across state and federal, that's what people want us to do and they're right to want that. I mean people get terribly confused - completely understandably - about who is responsible for what in our Federation because it is very complex. The most important thing we can do Geraldine is to us, work with the states to focus on the issues that people care about on the ground - affordable, reliable energy, making sure we meet our emissions obligations. That's exactly what we're focusing on.

GERALDINE DOOGUE: Alright. Well it'll be interesting to see what comes out at the end of the day. And look, before I let you go, Parliament resumes next week and you'll be facing more questions about the letter you sent to City of Sydney Lord Mayor Clover Moore after a Senate estimates hearing last week heard a draft of that letter from your department did not include the inflated figures about the city's travel expenses, the final letter contained and for which you apologised. There's still I think, loads of people asking the question, how did those figures get into the final version of the letter if they weren't in the draft?

ANGUS TAYLOR: Well, Geraldine, I've made a very clear statement on this. I've dealt with the issue and I've really got nothing more to add. I mean, my focus today and my focus for the coming weeks will be on affordable, reliable energy, and delivering on our international obligations. That is what Australians want me to focus on, and I'm not going to be distracted.

GERALDINE DOOGUE: It's a very curious episode though, Mr Taylor. It's a very curious episode.

ANGUS TAYLOR: Well, Geraldine, I've apologised to the Mayor. You've got a copy of that, the ABC has got a copy of that letter and it's published. Look, I've been very clear about this - I don't have anything more to add and I'm not going to be distracted from my job which is to ensure that Australians get the affordable, reliable energy they deserve.

GERALDINE DOOGUE: Alright then, thank you very much for joining us.

ANGUS TAYLOR: Thanks for having me.