TThe year is coming to an end and for some Australians that means thinking about Christmas or the beach. For others, it will mean wondering how they will cope with the next heat wave or bushfire. Already, two states are burning.
The least bold prediction for the summer is that temperature records will fall. That's what's happening with temperatures averaging 1.5 degrees higher than they were just over a century ago.
If logic holds, it could intensify the focus of the Australian political class in 2026 on prioritizing how to deal with the country's dependence on the main driver of these changes: fossil fuel production.
It has been two years since Climate Change Minister Chris Bowen said “The era of fossil fuels will end” after nearly 200 countries agreed the world should phase out the use of coal, oil and gas. This position was confirmed at the recent Cop30 summit in Brazil, when Australia signed what activists called his strongest statement yet that countries must act quickly on fossil fuels to try to limit global warming to about the level it is now.
What does this mean the country should do at home? So far, for the world's leading coal and gas export industries, the government's assumption is that the difference is negligible.
Changes are taking place in the country's main power grid, where renewables provided nearly 50% of electricity over the past week, surpassing coal generation. However, this trajectory is becoming increasingly clear. pace uncertain and the transition faces resistance.
The reaction to the Australian Energy Market Operator's recent report reflected how the climate issue is often framed. The report warns that investments needed in system safety measures to keep the grid running as aging coal plants close are not happening quickly enough. This has raised the possibility that the life of the Eraring coal station, the country's oldest, could be extended if enough is done. synchronous generators — the spinning machines, which provide the necessary inertia for the system, were not connected in time.
Some media outlets have made headlines, warning of power cuts if Eraring closes in 2027. The message to the casual reader or listener was a warning not to stop extracting fossil fuels.
The report had a different emphasis. His central point was that investment in grid security needed to be accelerated and that a short-term extension of the life of a coal-fired power plant might be required if this did not happen in time.
To put it bluntly: change is coming, we better move on.
This message should be familiar to you. This echoes the advice of scientists, global investors, industry, much of civil society and leading international agencies. But as Aemo's treatment of the report has shown, it often remains just lip service in an environment that struggles to imagine a world free of fossil fuels.
This is most obvious in Australia's biggest contribution to the climate crisis – its world-leading exports of coal and liquefied natural gas (LNG).
Australia is second only to Indonesia in supplying thermal coal, which is burned to generate electricity. It competes with the US and Qatar as the largest seller of LNG. It is by far the largest exporter of metallurgical coal, which is used in the steel industry.
The country has not reduced this influence since the then coalition government signed the landmark Paris climate agreement in 2015. Instead, it went in the opposite direction.
A recent report by Oil Change International found that Australia led the world in expanding its oil and gas industry between 2015 and 2024, increasing production by 77%.
On the coal side, Australia is shipping more thermal goods than it did a decade ago. And Albana's government has approved at least 32 fossil fuel development and expansion projects, mostly for export, since its election in 2022.
Some in the government seem to believe that these exports can continue indefinitely. Dan Repacoli, Labor MP for the Hunter in the NSW coal belt, last month told parliament it was “nonsense” the assumption of the government's intention to achieve net zero emissions by 2050 meant that coal mines would have to close because “net zero is one thing: offset.”
According to this view, pollution can continue at existing or even higher levels indefinitely. There's nothing to worry about.
But scientific advice directly suggests the opposite – Achieving net-zero emissions will require significant reductions in emissions and limiting the use of offsets to those cases where there are no viable alternatives.
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In reality, if the world is to successfully tackle climate change, the methods used to create offsets—mostly related to planting or protecting trees and other vegetation—will be largely needed to suck historic carbon dioxide out of the atmosphere through a “negative emissions” program. The world will fail if they are used to justify burning dirty fuels when there are alternatives.
This is science. If you believe Australia has an ethical responsibility for climate change, that should be enough.
But the stronger political argument that Australia needs to do much more to prepare to end fossil fuel exports is likely to be based on economics.
Treasury modeling in September revealed coal and export costs could collapse by 50% in the next five yearsno matter how quickly Australia reduces emissions domestically. Coal exports are projected to decline by 42–51% over the next decade. LNG exports will fall by about a quarter.
Why? Because despite the best efforts of the leaders of the United States, Saudi Arabia and Russia, most countries are preparing for a world less dependent on fossil fuels.
A new report from advisory firm Climate Resource argues that if countries act to meet their targets, the decline of the coal export industry could happen even faster than the Treasury suggests. It has found that demand for thermal coal in Australia – mainly from New South Wales – could fall by 64% or more over the next decade. The Queensland coal industry could cut production by at least 28%.
This indicates that when coal demand does fall, China and India will likely be the first to cut imports, allowing their domestic thermal coal industries to enter a more gradual decline.
South Korea, Australia's fourth largest market for thermal coal, is already signaled that he was heading for the exitlast month joining 60 other countries in the “Powering Past Coal Alliance” and pledging to close all its coal-fired power plants by 2040.
Climate Resource's Dr Anita Thalberg says Australia must do more to manage economic risks. This includes helping fossil fuel communities through what is happening and expanding. his commitment to developing green industries it wants to build.
Her warning is the same one scientists have given in the wake of the bushfires that have devastated parts of New South Wales and Tasmania this week: “The worst thing we can do is not prepare.”
Expect to hear this a lot more next year.
