A $2 billion deal between NSW and the Commonwealth to boost gas supply will commit both governments to invest in clean technology and energy efficiency, the Prime Minister says.

Scott Morrison says it’s the first of many similar deals he hopes to sign with state and territory governments across Australia.

Mr Morrison and NSW Premier Gladys Berejiklian signed an MOU on Friday, describing it as a landmark for the nation.

The agreement means NSW will provide an additional 70 petajoules of gas for the east coast market each year, and in return Canberra will fund NSW emission reduction initiatives and underwrite the delivery of new interconnectors and renewable energy projects.

Annual gas consumption is around 120 petajoules a year, so the new commitment represents a sizeable whack.

“There is no credible plan to lower emissions and keep electricity price down that does not involve the greater use of gas as an important transition fuel,” Mr Morrison said.

“This plan is about getting greater access to that gas, as a vital accompaniment to our record investment in renewables.

“Our agreement also outlines a responsible transition of the NSW electricity sector to lower emissions technologies, while recognising the critical contribution that energy dependent manufacturing jobs make to the economy.”

He said the agreement sets out a “plan of practical action” to invest in clean energy, hydro research, energy efficiency and technology to reduce emissions from coal extraction, preparation and use.

The deal also includes:

• $960m of federal funds for NSW to upgrade energy grid and invest in emissions reductions.
• Joint underwriting of delivery of HumeLink and Queensland-NSW interconnectors
• Removing barriers to coal supply at the Mount Piper Power Station
• Financial support for pilot renewable energy zone in the Central West.

Mr Morrison said the plan would help Australia “meet and beat” its 2030 carbon emission targets, but didn’t say specifically what it would deliver in terms of reductions.

Ms Berejiklian said the agreement meant NSW could continue to strengthen and diversify its energy sector by securing traditional sources while growing its currently $26 billion pipeline of energy projects, both renewable and non-renewable.

“We need to make sure that we maintain our energy security into the future and lowering emissions doesn’t mean getting rid of every form of energy that we currently use,” she said.

Greens MP David Shoebridge described the plan as dangerous.

“We don’t need to be extracting more gas to “transition” to renewable energy, we need to be building solar, wind and renewable storage now,” he said.

The Climate Council said the deal had only increased investment in fossil fuels, which would drive climate change.

“You don’t reduce emissions by increasing investment in fossil fuels,” Climate Councillor Greg Bourne said.