FIONA WYLLIE:  The Federal Government today has negotiated an energy deal with the New South Wales Government. More than $2 billion is going to be invested into this state but the Berejiklian Government will have to free up massive amounts of gas for domestic use in return. To find out how this is all going to work, I have the Minister for Energy and Emissions Reduction, Angus Taylor. Good afternoon.

ANGUS TAYLOR: Good afternoon. Thanks for having me, Fiona.

FIONA WYLLIE:  What will you be providing to New South Wales in that $2 billion?

ANGUS TAYLOR: There's three parts to this. One, is increasing gas and electricity supply and we'll obviously then be playing a role in that, particularly on the electricity supply side but we need the gas. Second, is improving grid security. It requires supporting transmission interconnection and network access. And the third, is emission reduction projects. Across that, that's roughly a split 50-50 between State and Federal Government of $2 billion of funding and obviously, we're providing half of that. Importantly, this is all about getting more affordable, reliable electricity, and energy more broadly, and at the same time, bringing down emissions, and that's what we need to do if we're going to ensure that we have reductions in emissions but not reductions in the size of the economy.

FIONA WYLLIE:  Okay, well let's talk more about that, but I just want to bring up because I know you have family in Nimmitabel - the fires are burning all over the southeast, around Canberra at the moment. Are you in Canberra today?

ANGUS TAYLOR: I am and of course, there are fires just to the south here. Yeah, that's right.

FIONA WYLLIE:  Yeah, down past Royalla and towards Michelago and stuff. Why aren't we counting the emissions from all these bushfires? All that carbon dioxide and just huge amounts. We've had smoke problems across the country and going around the world from the bushfires in our emissions as a country.

ANGUS TAYLOR: At the convention which has been set for many, many years ago and has been stuck to across the world, in the Kyoto Protocol and the Paris Agreement, is that it's focused only on emissions which are driven by human activity. So, that is the approach we take. It's the approach we've always taken. There's two sides to that, of course, because there's things that happen in nature that absorb emissions and there's things that happen that produce them-

FIONA WYLLIE:  Have we got anything like the bushfires that suck up as much as have been put out? Because surely, this is going to impact the world environment.

ANGUS TAYLOR: The truth is there's things that absorb, the oceans absorb enormous amounts of carbon and there's fires that produce them, but we're focused on the things we can. And globally, this has been the convention for a long time. The focus-

FIONA WYLLIE:  [Talks over] But if there is that connection - can I just for a moment, please - if there is a connection between climate change and bushfires, and your Prime Minister has now said that that is the case, and we're going to see more bushfires and we're going to see more carbon dioxide - isn't it this vicious cycle?

ANGUS TAYLOR: Well, look, that's a different issue. But the point is that you and I and this discussion are not going to change a global principle which has been in place for a long while and there's no plan to change that. They are rules we work within and importantly, what it means is we do focus on the things we can have a direct impact on and that's exactly what we're doing in this deal, Fiona.

FIONA WYLLIE:  Okay, let's talk about that deal then. I know you want to. There are already concerns though being expressed - this focus on gas will push through the approval of the controversial Narrabri Gas Project. Where does that project fit into your plan, and what about the concerns that Santos will drain 37 billion litres of groundwater?

ANGUS TAYLOR: The agreement is 70 petajoules of gas. That's the agreement. Now, the total demand in New South Wales is 120, so this is a very significant increase in the available gas in New South Wales. We haven't been prescriptive about where that could come or would come from. Narrabri is one very real option and it has to go through environmental approvals. It's got to be approved. I'm sure the New South Wales Government will do everything appropriate, necessary to make sure that if an approval is given, that it's sympathetic with the environmental requirements that are so important. But there are other options as well. There's import terminals both in New South Wales and Port Kembla that have been proposed for over 100 petajoules. So, look, we're agnostic to where the gas comes from. I tell you what we're not agnostic to is making sure we have enough gas to complement the very rapid increase in renewables we've seen in New South Wales, including solar on people's houses. You have to have complementary fuel sources to that, so that when the sun goes down you've still got available energy. Of course, gas has been very, very effective at doing that all across the world. And because it's half the emissions of coal. It combined with solar and wind can ensure that you're on a pathway to significant reductions in emissions as well.

FIONA WYLLIE:  I've been listening to ABC PM and the program has been discussing hydrogen this week. Do you see hydrogen playing a role in our energy mix in the future?

ANGUS TAYLOR: Yes, absolutely and in fact before Christmas we agreed to a Nation Hydrogen Strategy at the Council of Australian Governments. So across federal and state governments. We as a Federal Government have invested over $500 million into hydrogen, and that includes major projects, pilot projects. We're producing hydrogen for export. This will be the first time we have done it on anything like this scale. What's powerful about hydrogen is it can be zero emissions and it's very transportable just as oil and gas are, but of course it can be much lower emissions. So that's important technology and crucial to all of this over time will be technologies that can ensure that we keep a strong economy, at the same time reduce our emissions and we think hydrogen has an important role to play.

FIONA WYLLIE:  And do you see today's announcement of $1 billion from the Federal Government being met by the New South Wales Government with $1 billion as decreasing energy prices for everybody in New South Wales?

ANGUS TAYLOR: Absolutely. I mean that's central, look at what we're seeking to achieve here is a strong economy alongside falling emissions. That's the goal. Crucial to that is more supply and making sure that mix of energy and the energy efficiency initiatives that are going into place give us that falling emission profile, but that's got to be alongside lower electricity and gas prices and we're very confident that can be achieved. We've seen very, very good gains in recent months and we'll have more to say about that, but this is about locking that in and continuing to drive down prices whilst also driving down emissions.

FIONA WYLLIE:  So for your $1 billion investment, how much would you like to see our bills going down?

ANGUS TAYLOR: I've been very clear that we want to see prices across the National Electricity Market approaching $70 per megawatt hour which is been higher and that they've been 20 or 30 per cent higher than that in wholesale terms. We do want to see those come down. We've seen reductions in people's bills in recent months, but it hasn't been across the board. We want to see it across the board. On average we've had three consecutive quarters of CPI reductions in electricity prices. But you'll have listeners out there who haven't received benefits and we want to make sure it is across the board and we'll continue to work hard to bring that to fruition. That's why increasing supply of energy is such an important part of this agreement announced today.

FIONA WYLLIE:  A few text messages coming through are you happy to hear what our listeners are saying?

ANGUS TAYLOR: Sure, sure.

FIONA WYLLIE:  Brad says: “So it's Angus Taylor is behind the latest diversion from best policy with gas. It is a fossil fuel we are meant to be rejecting in order to reduce emissions drastically, after seven years of worsening. What about gas reservations, like reserving gas, like Western Australia does.”

ANGUS TAYLOR: Now look it's a good question. Look we have been even in recent days we've said that we're looking at a gas reservation policy focused on new gas developments. We have to make sure enough of the gas is available for domestic use. That is extremely important. But it also means we have to have enough gas available that we can meet export markets and domestic. Your listener made a point about emissions. Gas is half the emissions of coal.

FIONA WYLLIE:  But it's still a fossil fuel.

ANGUS TAYLOR: Well, yes, but the great advantage of gas is that it can be complementary to solar on your roof or big solar farms. In that way, the mix of solar and gas or wind and gas can give you much lower emissions than you would otherwise be getting. Now is that the ultimate answer? No. But it is a very, very important part along the way. We've seen in country after country across the world that gas is playing a very, very important role.

FIONA WYLLIE:  Well on that Robert Lennox says with the availability of gas, Qatar exports a similar amount of gas as Australia. Why is it Australia only gets $800-900 million in royalties for Qatar gets $23 billion?

ANGUS TAYLOR: Well the royalties are levied, mostly for the onshore gas at least, by state governments. Some of it is also levied in Western Australia with the offshore gas by the Federal Government. I don't know what the total is. But look there's no doubt that the gas industry has employed a large number of people and it's provided not just royalties but also income tax and company tax which has been good for Australia. We've grown in a very short period of time the largest gas export industry in the world. We're actually ahead of Qatar now and that's a great thing because that's-

FIONA WYLLIE:  [Interrupts] But why are we making the same money as Qatar? I know our wages might be higher but surely-

ANGUS TAYLOR: I haven't had a chance to look at those numbers so I'm not going to comment on the specific numbers you have, Fiona. But what I would say, is that you know if you go up to Toowoomba and other areas where there's a gas industry that's developed, it has created an enormously strong economy in those areas and that's a good thing. But just as importantly, when we export gas to Japan and Korea and China, we are reducing their emissions and that's why the demand for our gas has gone up so fast. It's part of the mix. You need a balance. This is the whole point of this deal - it's a balance across a range of different fuel sources and that balance gets us to where we need to go.

FIONA WYLLIE:  Minister, Tony from Glen Innes says the same thing: “Why import gas when we already export most of it now?” So you've answered that. So at least he knows that you've heard his thoughts. But finally given the criticism of the Government and the Prime Minister over this bushfire season, do you recognise there is genuine concern from people that this could be our new future? Extreme heat – we are getting that today. Fires burning non-stop throughout summer. What confidence can they have, given what's taken place, that the Government is really serious about climate change and the impact it is having on our country?

ANGUS TAYLOR: We're serious because we are meeting and beating our targets. I mean, look, we're 1.3 per cent of emissions so the crucial bit, the crucial point is that we do our bit. That's exactly what we're doing. We met our and beat our Kyoto 1 target. We'll meet and beat our 2020 Kyoto 2 targets, which we already know we're going to be well over 400 million tonnes ahead on that. And of course, we're working hard now already on our 2030 targets. We've got to do our bit but we want to see countries like China, India and the United States, Europe also, New Zealand, and Canada doing their bit. That's absolutely crucial because there's no one country in the world that can solve this on their own.

FIONA WYLLIE:  Minister thank you very much for your time today.

ANGUS TAYLOR: Thanks Fiona.