Gas and climate: the final rort

Woodside Energy’s North West Shelf (NWS) LNG processing facility in Western Australia has been operating since 1984. It is one of the world’s largest LNG facilities. In May 2025 — weeks after Labor won a decisive re-election — the government conditionally approved an extension of the facility’s operating licence until 2070.

The Climate Action Tracker stated directly that the NWS extension was ‘incompatible with the Paris Agreement’s goals and with the government’s emission reduction commitments.’

This is more than politics. It is important to have the moral courage to stand up for those who are most affected by climate changes.Maina Talia, Tuvalu’s Minister for Climate Change, responding to Australia’s NWS extension to 2070

Vanuatu’s Minister for Climate Change, Ralph Regenvanu, described the decision as ‘a slap on the face of Pacific Island Nations.’

The government’s position was that gas had a role to play in Australia’s energy future as part of the transition to renewables. This is the standard framing of Australia’s ‘Future Gas Strategy’ — released in 2024 with bipartisan support and, as Article 5 of this series documented, with the active lobbying involvement of the gas industry.

Australia’s 2030 climate target — a 43 per cent reduction below 2005 levels — covers Australia’s domestic greenhouse gas emissions. It does not cover the emissions produced when Australian coal and LNG are burned by the countries that import them.

This is not an unusual feature of international climate accounting. Countries are responsible for emissions within their borders under the UNFCCC framework. The importing country counts the emissions when the fuel is burned.

This is cakes of coal, volumes of LNG they’re exporting and they use creative accounting to either not count them, or to offset them in Australia’s contribution to emissions that cause climate change.Professor David Karoly, University of Melbourne

Australia can hit its 43 per cent domestic target while simultaneously expanding coal and LNG exports. The two are arithmetically compatible because they are measured in different columns. But the atmosphere does not know which column a tonne of CO2 came from. The climate impact is the same.

The arithmetic of Australia’s climate-and-gas position is striking when placed in a single frame.

Australia’s 2030 domestic emissions target: 43 per cent below 2005 levels. Australia’s fossil fuel subsidies in 2024–25: A$14.9 billion, rising. Australia’s PRRT from offshore gas: A$1.5 billion, falling. Australia’s approved new gas and coal projects in 2023–2025: NWS extension to 2070, seven new coal mine approvals. Australia’s exported carbon emissions: more than twice domestic emissions, rising. Australia’s Climate Action Tracker rating: ‘Insufficient.’ Australia’s 2035 NDC: not yet submitted as of this publication.

Energy Minister Bowen signed ‘an explicit declaration at COP30 to transition away from fossil fuels’ while his government approved infrastructure designed to extend gas processing until 2070. The contradiction was not subtle.

For Pacific Island nations, the climate-and-gas contradiction is not a policy paradox. It is an existential question.

Many Pacific Island nations — including Tuvalu, Vanuatu, Kiribati, Marshall Islands — face direct existential threat from sea level rise driven by global warming. They are among the lowest emitters on earth. They have contributed almost nothing to the atmospheric carbon that threatens them. They are the countries most exposed to what Australia’s gas exports produce.

Vanuatu has been a leading voice for a global Fossil Fuel Non-Proliferation Treaty. Pacific nations have consistently pushed the world to move faster on climate at every COP. When Australia — which has geopolitical responsibility for the Pacific, which markets itself as the Pacific’s great partner and defender — approved the NWS extension to 2070, Vanuatu’s minister called it ‘a slap on the face.’

For these nations, the fact that Australia provides A$14.9 billion in fossil fuel subsidies while asking Pacific Island governments to trust it with COP31 is not just hypocrisy. It is the condition under which their countries may cease to exist.

Australia’s domestic electricity grid has been rapidly decarbonising. By 2025, over 40 per cent of the main electricity grid was powered by solar, wind, and hydropower. This is a genuine achievement, substantially enabled by the Albanese government’s renewables policies.

But this domestic success story is ‘dramatically undercut by Australia’s unwavering support for its fossil fuel exports.’ A country can have 100 per cent renewable electricity and still be one of the world’s largest exporters of fossil fuels. The domestic grid’s emissions and the exported emissions are counted separately.

The Climate Change Authority’s 2024 Sector Pathways Review recommended that Australia pursue bilateral decarbonisation agreements with Japan and South Korea — explicitly reorienting the relationship from gas supply to renewable energy transition. Australia’s gas industry, and the diplomatic infrastructure supporting it, has resisted this reorientation.

Article 1 of this series asked: who benefits from Australia’s gas? The answer was: primarily foreign shareholders, headquartered in Houston and Tokyo.

Article 11 asks the corollary question: who bears the cost? The answer is: present and future Australians, through the foregone wealth of untaxed resource extraction. And Pacific Island communities, whose nations are being submerged by the emissions the extraction produces.

The gas rort has a financial dimension and a climatic dimension. This series has focused primarily on the financial dimension because it is more tractable — the numbers are clearer, the mechanisms are documented, the reform path is defined. But the climatic dimension is the larger one.

If Australia had taxed gas exports at 25 per cent — still well below Norway’s 78 per cent — it would have raised an estimated A$17 billion per year in additional revenue. If it had taxed at Norway’s rate, it would have built a sovereign wealth fund. And if it had not approved new gas projects until 2070, its exported carbon emissions would not be on track to double again.

The three things — the taxation failure, the export dependence, and the climate contradiction — are not separate problems. They are three expressions of the same political arrangement: an arrangement in which the gas industry’s preferences have consistently prevailed over the public interest, the public finances, and the climate.

This is the final article of The Rort’s Gas Rort series. Across eleven articles, this series has documented: the scale of what was given away, the design of the tax that failed to capture it, the model that Norway used to build wealth from the same resources, the companies that profit, the political connections that protect the arrangement, the 2010 campaign that killed the only serious reform attempt, the pattern of failure since, the media that did not tell this story, the cleanup bill that is coming, the domestic market the exports left behind, and the climate cost that no national account will record.

The gas is Australian. The tax is broken. The companies are foreign. The politicians are connected. The media is compromised. The cleanup will be partly public. The east coast market is distorted. And the atmosphere that absorbs what the extraction produces does not distinguish between a tonne counted in Australia’s NDC and a tonne attributed elsewhere.

The May 2026 Budget may include a windfall levy. A Senate inquiry is underway. The PRRT trajectory is downward. The decommissioning is beginning. The gas will keep flowing to 2070 from the North West Shelf.

We’ll be covering it.