Australia's Labor government has legislated the most ambitious climate targets in the nation's history. It has also approved more fossil fuel projects than any government before it. Can both things be true at once — and for how long?
A Nation at a Crossroads
In the winter of 2022, Anthony Albanese stood before cameras in Canberra and declared that Australia was finally, as he put it, "back":
• Back in the game on climate change.
• Back in good standing with Pacific neighbours for whom rising seas are not a notion but a reality.
• Back in a conversation that the country had, for nearly a decade, conspicuously avoided.
The language was of renewal.
Three years later, that renewal looks considerably more complicated.
Australia's Labor government has passed genuine climate legislation, reformed industrial emissions rules, and overseen a renewable energy construction boom that, by the close of 2025, had pushed renewable sources to nearly half of all electricity generated across the National Electricity Market. [2]
It has also, in the same period, approved more than two dozen new or expanded coal, oil, and gas projects, extended the life of Australia's largest LNG facility until 2070, and increased public subsidies for fossil fuel producers to approximately A$14.5 billion in a single financial year. [4]
This is the central tension of Labor's climate project: a government that believes, with evident sincerity, that it is changing Australia's course, while continuing to sign off on decisions that, by its own metrics, point in the opposite direction.
Understanding how that contradiction survives — and whether it can — requires looking closely at the policy architecture Labor has built, the forces that shape it, the limits of what the party is politically willing to do, and what science says must be done if the targets on paper are to mean anything at all.
A Philosophy in Two Keys
The Australian Labor Party does not, by its own account, frame climate policy as either environmental necessity or economic transformation.
It frames it as both, simultaneously and without apology.
The governing logic, articulated most clearly by Climate Change and Energy Minister Chris Bowen and enshrined in the Powering Australia plan, is that decarbonisation is the opportunity of the century, not a cost to be managed, but a restructuring to be embraced. [1]
Bowen, who has emerged as arguably the most consequential minister in the government's climate agenda, speaks frequently of Australia becoming a "renewable energy superpower", a country that trades not coal and gas but hydrogen, green metals, and clean electricity.
The 2024 Net Zero Plan, which established emissions reduction trajectories across electricity, industry, transport, and agriculture, is the clearest expression of that dual philosophy in policy form. [1]
Independent modelling commissioned by Labor estimated the Powering Australia plan would create 604,000 direct jobs by 2030, attract A$76 billion in investment, and reduce average household power bills by several hundred dollars annually. [7]
That modelling, conducted by energy economics firm RepuTex, has been cited repeatedly as evidence that the transition is not only manageable but economically compelling.
Critics note, however, that modelling commissioned by governments to support their own policies deserves scrutiny, not simply citation.
What is not in dispute is that the 43% reduction target was a significant step beyond what the previous Coalition government had committed to, and that legislating it — through the Climate Change Act 2022, with the support of the Australian Greens — gave it a legal durability that executive pledges never possess. [1]
In September 2025, the government went further, announcing a new Nationally Determined Contribution under the Paris Agreement that introduced a 2035 emissions reduction target of 62 to 70 percent below 2005 levels, a figure the Climate Council described as a meaningful escalation. [8]
The Safeguard Mechanism: Reform or Rebranding?
If there is one piece of legislation that Labor points to as the engine of its industrial emissions strategy, it is the reformed Safeguard Mechanism, which came into effect on 1 July 2023. [3]
The mechanism applies to approximately 215 industrial facilities emitting more than 100,000 tonnes of carbon dioxide equivalent per year, covering around 28% of Australia's total emissions. [3]
Under the reforms, each covered facility must reduce its emissions baseline by 4.9% each year through to 2030, with the aggregate target set at no more than 100 million tonnes of CO₂ equivalent from Safeguard facilities in 2029–30, a reduction the government projects will deliver more than 200 million tonnes of cumulative abatement over the decade. [3]
Facilities that exceed their baselines must either reduce on-site emissions or acquire carbon offset credits, known as Australian Carbon Credit Units.
The Environmental Defenders Office, which advocated for stronger climate legislation, described the reforms as "a significant step" and noted that, for the first time, industrial facilities would face a legally binding limit on gross emissions. [9]
But the Climate Action Tracker, an independent scientific analysis project, has raised a fundamental concern: too many covered facilities have so far met their declining baselines through the purchase of offsets rather than through actual on-site emissions reductions. [6]
In the tracker's assessment, fewer than a third of the "reductions" credited under the mechanism in its early period reflected genuine decreases in emissions, with the remainder representing offset purchases that delay rather than achieve decarbonisation. [6]
This is not a trivial concern.
If industry learns to manage the mechanism through offset markets rather than operational change, the structural transformation the policy is supposed to drive never actually occurs, and Australia arrives at 2030 with paper credits rather than retooled factories.
The government's position is that the mechanism is working as intended, that market flexibility, including offsets, is a feature rather than a flaw, allowing least-cost abatement while regulatory pressure tightens over time.
A formal review of the mechanism is scheduled for the 2026–27 financial year, providing an opportunity to recalibrate if the early data confirms that offset reliance is crowding out real change. [3]
The Electricity Revolution
The clearest success story in Labor's climate record, by a considerable margin, is the transformation of the electricity grid.
In the December quarter of 2025, renewables accounted for 49.9% of generation across the National Electricity Market, the first time the grid had come close to a majority-renewable position in its history. [2]
Western Australia exceeded 50% renewable generation for the first time in the same period. [2]
The Clean Energy Regulator estimated that close to 7 gigawatts of new renewable capacity was added to Australia's grid in 2025, following a record 7.5 GW in 2024, figures that the government's Capacity Investment Scheme has helped drive by de-risking investment in new generation and storage projects. [2]
Bowen has described the 82% renewables target for 2030 as "ambitious and achievable," and the data, at least in the electricity sector, lends credence to the claim.
Average wholesale electricity prices fell sharply across the NEM in the December 2025 quarter, declining 48% year-on-year to A$68 per megawatt hour, among the lowest levels in the world and a powerful counter-narrative to opponents who predicted that the energy transition would push prices toward catastrophe. [2]
Australia has also become the world's third-largest market for battery energy storage installations, behind only China and the United States, a development that is materially changing the economics of solar power by allowing daytime generation to be stored and dispatched during peak evening demand. [2]
The A$20 billion Rewiring the Nation program, designed to modernise and extend the ageing high-voltage transmission network, remains a work in progress, however, with grid bottlenecks, lengthy planning approval processes, and community opposition to transmission corridors continuing to constrain the pace at which new renewable zones can be connected to load centres. [10]
The electricity sector accounts for around 35% of Australia's total emissions. [6]
That means the grid transformation, real and impressive as it is, addresses only a portion of the emissions task, and the harder portions, including transport, agriculture, heavy industry and land use, have received substantially less policy attention.
The Fossil Fuel Paradox
In May 2025, just weeks after being re-elected with a strengthened majority, the Albanese government approved a 45-year extension to Woodside Energy's North West Shelf gas project, allowing the facility to continue exporting LNG from Western Australia's Burrup Peninsula until 2070. [4]
The North West Shelf is Australia's largest gas project, producing approximately 6 million tonnes of domestic greenhouse gases annually, while exporting more than 85% of its product to buyers in Japan, China and South Korea. [4]
The Climate Council calculated that extending the project's life would lock in more than 4 billion tonnes of climate pollution over its remaining operational life, the equivalent of roughly a decade of Australia's current annual domestic emissions. [4]
Greg Bourne, a former manager at BP's North West Shelf operations, described the approval as an act the government would come to regret: "They've just approved one of the most polluting fossil fuel projects in a generation, fueling climate chaos for decades to come." [4]
This was Labor's 27th coal, oil or gas project approval since taking office in 2022, a number that includes 10 new coal mine expansions approved under former Environment Minister Tanya Plibersek, and more than 120 coal seam gas wells approved in Queensland. [4]
The government's standard defence relies on two arguments.
The first is that gas is a "transition fuel", necessary to back up intermittent renewables as the grid is rebuilt, and essential to the economic security of communities that have long depended on the sector.
The second is that the Safeguard Mechanism applies to operating facilities, meaning new projects will face declining emissions baselines once they come online.
Neither argument survives rigorous scrutiny from the scientific community.
The International Energy Agency has stated categorically that no new coal mines or extensions are required in a scenario consistent with net-zero emissions by 2050. [11]
The Climate Action Tracker has noted that Australia lacks any federal-level strategy or legislated timelines for a transition away from coal and fossil gas, as was agreed at COP28's first Global Stocktake. [6]
And as the Australia Institute has pointed out, the Safeguard Mechanism cannot be used as a justification for approving fossil fuel projects, because it only begins to apply once a project is operating, it places no legal barrier on new project approvals at all. [12]
The irony is that fossil fuel subsidies, rather than declining as the energy transition proceeds, have grown under Labor to approximately A$14.5 billion in 2024–25, a roughly 30% increase since the party took office. [5]
Tim Buckley of Climate Energy Finance has described the simultaneous operation of the Safeguard Mechanism and fossil fuel subsidies as structurally "illogical": the government requires the largest emitters to reduce their emissions intensity by 4.9% per year, while simultaneously providing financial incentives that reduce the cost pressure driving that very change. [5]
Who Shapes the Agenda
Understanding why these contradictions persist requires looking at who, within the Labor system, actually holds power over climate policy.
The formal architecture assigns the Climate Change Authority an advisory role, charged with providing independent, science-based recommendations to the Minister, who in turn must make annual statements to Parliament about progress toward legislated targets. [1]
In practice, however, the Climate Change Authority's influence on the pace or ambition of policy has been modest.
The real drivers of policy sit in cabinet, in the Prime Minister's office, in factional bargaining within the ALP, and — critically — in the structured influence of major unions.
Unions representing energy, mining, and construction workers have considerable formal weight inside Labor's decision-making processes, and their priorities have shaped the character of what the government calls a "just transition."
That phrase — "just transition" — has become one of the most contested in Australian climate politics.
For union leaders in Queensland's Bowen Basin coalfields, or in the Pilbara's LNG workforce, it means guaranteed jobs in new industries before old ones close, social insurance for displaced workers, and community investment in affected regions.
For climate advocates, it has come to mean something more troubling: a licence to delay, an indefinite holding pattern dressed in the language of fairness.
State Labor governments, particularly in Western Australia and Queensland, add another layer of complexity.
Both states are major fossil fuel exporters, and both state governments have substantial economic and political interests in preserving that status for as long as possible.
When the federal government approved the North West Shelf extension, it did so in a political environment where Western Australian Labor had signalled strong support for the project's continuation, and where federal Labor's electoral arithmetic depends, in part, on maintaining support in resource-dependent communities across both states.
Business influence, particularly from the energy and resources sectors, operates through direct lobbying, through industry bodies, and through the quiet channels of ministerial relationship-building that operate in every government regardless of party.
The renewable energy industry, a growing political constituency with its own investment and employment arguments, has also strengthened its voice inside Labor's policy process, and on many questions, that industry's interests and Labor's legislative ambitions align.
Climate scientists and independent advisory bodies, by contrast, operate at a greater remove from actual decisions, providing expert input that is valued rhetorically but filtered through political and economic considerations before it shapes outcomes.
The Numbers Beneath the Numbers
Australia's emissions trajectory presents a picture more complicated than either the government's optimism or its critics' despair.
Government projections published in December 2024 suggested Australia might already be close to meeting its 2030 target of a 42.6% reduction below 2005 levels. [6]
But the Climate Action Tracker's analysis revealed that much of the apparent progress rests on accounting for land use, land use change, and forestry removals, carbon sinks that have been repeatedly revised upward in official estimates since 2018, creating what the tracker described as "the illusion of action." [6]
Stripping out land sector contributions, gross domestic emissions had declined only about 2% by 2024 — a figure the tracker set against a claimed 28% reduction when the land sector is included, a gap that raises serious questions about where Australia's actual decarbonisation is occurring. [6]
Emissions from the fossil fuel industry, agriculture, and waste sectors have largely flatlined since Labor took office. [6]
When the electricity and land sectors are excluded, emissions from all other parts of the economy are projected to be 4.5% above 2005 levels in 2030, meaning that, outside the grid and the forests, Australia has made almost no measurable progress. [6]
For Australia to align with a 1.5°C pathway under the IPCC's framework, the Climate Action Tracker calculates that the country would need to cut emissions by at least 57% below 2005 levels by 2035, excluding land use, a target that would require policy interventions far beyond anything currently legislated or proposed. [6]
The New Vehicle Efficiency Standard, introduced in 2024 and taking effect from mid-2025, was a meaningful addition to the policy toolkit — Australia was, before its introduction, one of the few developed economies without such a standard — but its projected cumulative impact of around 16 million tonnes of abatement to 2030 is modest against the scale of the overall emissions task. [6]
Pressure from the Left, Resistance from the Right
Labor governs in an environment shaped by pressure from multiple political directions simultaneously.
From the left, the Australian Greens and the climate-focused independent "teal" movement have consistently pushed for stronger targets, a faster transition, and an end to new fossil fuel approvals.
The Greens secured agreement on the Climate Change Act as a condition of their support in the previous parliament, and continue to argue that Labor's 2030 target is consistent with 2°C of global warming rather than the Paris Agreement's more demanding goal of "well below" 2°C. [13]
Monique Ryan, the teal independent who unseated former treasurer Josh Frydenberg in Kooyong in 2022, has called for the 2030 target to be raised to at least the level recommended by climate science, a position shared by most of the crossbench.
From the right, and more damagingly in electoral terms, Labor faces pressure from voters and communities in outer-suburban and regional seats where energy prices and job security carry more immediate political weight than long-term climate projections.
The spectre of the party's 2019 election defeat — when ambitious climate policy was weaponised by the Coalition as an economic threat to working families — continues to shape Labor's instinct for caution, particularly on measures that could be characterised as imposing costs on ordinary Australians.
Divisions within the party over the pace of change are real, if not always visible.
Right-faction figures with strong union ties have consistently restrained proposals to move faster on phasing out fossil fuels, particularly where those fuels support jobs in Labor-held regional constituencies.
The party has been able to contain those tensions while occupying a reformist middle ground, ambitious enough to distinguish itself from the Coalition, cautious enough not to frighten the regional and outer-suburban base on which its parliamentary majority depends.
Whether that middle ground remains viable as the 2035 target approaches and the scientific pressure intensifies is one of the defining political questions of this parliament.
The Superpower Hypothesis
Perhaps the most compelling and contested element of Labor's long-term vision is the proposition that Australia can parlay its renewable energy resources and critical minerals endowment into a new export economy built on green hydrogen, clean steel, and battery minerals. [1]
The A$22.7 billion Future Made in Australia plan represents the most concrete expression of that industrial policy logic, directing investment toward clean technology manufacturing, hydrogen electrolysers, and critical minerals processing.
The 2024 National Hydrogen Strategy refocused Australia's hydrogen ambitions on renewable-based production rather than fossil fuel-derived hydrogen, a shift that aligns the policy more closely with international market trends. [6]
Australia's solar resources are among the most abundant on Earth, its wind resource is substantial, and its reserves of lithium, cobalt, nickel, and rare earth elements give it a structural advantage in the supply chains for batteries, electric vehicles, and clean energy infrastructure.
If that vision is realised, Australia's transition from fossil fuel exporter to clean energy exporter would represent one of the most significant structural transformations in any advanced economy in the modern era.
The obstacles are formidable.
Renewable hydrogen remains expensive to produce at industrial scale, and global demand has not yet reached the level that would make large-scale Australian exports commercially viable without sustained public subsidy.
Green steel, produced using hydrogen rather than coking coal in the steelmaking process, is technically feasible, with Swedish producers having commercialised small volumes, but scaling it to the volumes that would allow Australia to phase out metallurgical coal exports would require enormous investment and international market development over decades.
And the coal mines that Labor approved in December 2024, several of which carry operational licences extending to the 2060s and 2080s, are hard to reconcile with a national strategy premised on leading the world toward coal-free steel production. [14]
International Standing and the Paris Reckoning
Australia's international reputation on climate change has unquestionably improved since Labor replaced the Morrison government in 2022.
The country no longer occupies what Albanese once called the "naughty corner" of UN climate summits.
The introduction of mandatory climate-related financial disclosures through the Australian Sustainability Reporting Standards, requiring large entities to report scope 1, 2, and 3 emissions, climate risks, and transition plans from 2025–26, has brought Australia into alignment with international best practice and generated genuine goodwill among institutional investors and trading partners. [15]
The announcement of the 2035 target of 62 to 70% below 2005 levels was received internationally as a significant commitment, and Australia's bid to host COP31 has been interpreted as evidence of genuine re-engagement with the multilateral climate process. [8]
But the Climate Action Tracker continues to rate Australia's overall climate response as "Insufficient" against the requirements of the Paris Agreement, pointing to ongoing fossil fuel approvals, rising subsidies, and the absence of any federal framework for phasing out coal and gas exports as evidence that the improved international posture has not yet been matched by commensurate domestic action. [6]
Australia's exported fossil fuel emissions were already more than twice its total domestic emissions in 2022, and had nearly doubled between 2010 and that date — a structural reality that any honest accounting of the country's climate impact must address, even if the current international framework does not require it. [6]
The Unresolved Tension
The Lowy Institute's 2025 polling found that 51% of Australians believe global warming is a serious and pressing problem requiring immediate action, even if it involves significant costs, a figure that rises to 63% among those aged 18 to 29. [16]
Three-quarters of Australians said in the same poll that renewables should play a major role in the energy mix by 2050. [16]
There is, in other words, a public mandate for climate action, not universal, and not without cost-sensitivity, but real, substantial, and growing among the demographic cohorts that will inherit whatever Australia chooses to do or not do in this decade.
The question is whether the Australian Labor Party has both the political mandate and the institutional capacity to act at the scale that mandate implies.
The argument that it does rests on the legislation it has passed, the grid it is transforming, the international credibility it has rebuilt, and the industrial policy vision it is beginning to fund.
The argument that it does not rests on the coal mines it continues to approve, the gas fields it continues to expand, the subsidies it continues to direct toward the industries it notionally seeks to replace, and the accounting assumptions on which its progress toward the 2030 target substantially depends.
In the La Niña summer of 2022–23, floods of unprecedented severity inundated inland Queensland and northern New South Wales, displacing tens of thousands of people and causing damage estimated at billions of dollars, losses that climate scientists had spent years warning were becoming more likely and more severe as the planet warmed.
In those communities, the abstraction of parts per million and nationally determined contributions gives way to something more immediate: the silted carpets, the waterlogged livestock, the insurance letters declining to renew.
The people living in those towns are, in many cases, the same people whose employment the government invokes when it justifies the approval of another coal mine or gas extension.
That is the deepest tension in Labor's climate politics, not the gap between targets and trajectories, not the contradiction between the Safeguard Mechanism and fossil fuel subsidies, but the question of what it actually owes to the communities it simultaneously claims to protect, both from climate change and from economic disruption.
It has not yet answered that question.
And the physics of the problem suggests the answer cannot be deferred indefinitely.
References
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Department of Climate Change, Energy, the Environment and Water. "Safeguard Mechanism Overview." Australian Government, updated 2024.
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Carroll, David. "Australia adds 7 GW of renewables in 2025, stays on track for 2030 target." PV Magazine, 13 January 2026.
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Department of Climate Change, Energy, the Environment and Water. "Safeguard Mechanism Reforms Factsheet." Australian Government, 2023.
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Climate Council. "Labor Approves Woodside Extension, Climate Chaos Ensues." May 2025.
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Green Central Banking. "Australian government juggles climate transition with support for gas." 4 June 2025.
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Climate Action Tracker. "Australia Country Analysis." Updated 2025.
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University of Melbourne. "Labor's climate policy puts Australia in the race." Pursuit, 2022.
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Climate Scorecard. "Australia: The Politics of Climate Change." November 2025.
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Environmental Defenders Office. "Safeguard Mechanism reforms — another significant step in Australia's climate law renaissance." April 2023.
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The Progress Playbook. "Australia back on track towards 82% renewable electricity by 2030." November 2024.
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World Socialist Web Site. "Australia: Labor's environment minister approves decades of continued coal mining operations." October 2024.
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Climate Council. "The Albanese Government's Fossil Fuel Approvals." Updated 2025.
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Carbon Brief. "Q&A: What does the new Australian Labor government mean for climate change?" May 2022.
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Australia Institute. "Taking out the trash 2024: three big coal approvals." December 2024.
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Climate Scorecard. "Australian Sustainability Reporting Standards and climate disclosure." November 2025.
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Lowy Institute. "Lowy Institute Poll 2025: Climate Change." 2025.
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