Australia's top court rules regulators must weigh coal's full climate toll

Australia’s highest court has delivered its first ruling on climate change, dismissing an appeal by Mach Energy and confirming that regulators must account for the full climate footprint of fossil fuel projects, including emissions released overseas after export.

The high court upheld a decision blocking a two-decade extension of the Mount Pleasant coal mine in New South Wales, and awarded costs against the company. At the heart of the case was the conduct of the state’s independent planning commission, the body responsible for approving the project. Justice James Edelman found the commission had failed to properly consider whether conditions should be imposed to mitigate the mine’s climate impact.

The shortfall, the court found, lay in how the commission treated greenhouse gas emissions. Scope 3 emissions, those generated when exported coal is ultimately burned abroad, accounted for 98% of the mine’s greenhouse gas output. Because the majority of those emissions would occur overseas, the commission declined to consider rules addressing them.

“By focusing only on 2% of the project’s emissions, the commission failed in its reasons to consider whether conditions should be imposed to ensure greenhouse gas emissions are minimised to the greatest extent practicable,” Edelman said.

The ruling exposes a gap in Australia’s regulatory framework. Projects with a direct emissions footprint exceeding 100,000 metric tonnes of carbon dioxide equivalent, classified as scope 1 and 2 emissions, fall under national rules requiring an annual emissions reduction of 4.9% or the use of offsets, or carbon credits. Emissions created overseas through the use of exported fossil fuels sit outside those rules entirely.

Mach Energy had sought to extend the life of the mine, which is due to cease operations in December this year, until 2048, and to double its coal production. The expansion would have allowed the extraction of an additional 406-million tonnes of coal. The company said it acknowledged the decision but was “disappointed”.

The case was brought by a community group whose president, Wendy Wales, a retired science teacher, welcomed the outcome. “Today the high court has said what we have always known: we cannot dig up coal, ship it overseas, watch it drive climate change, and then pretend the consequences have nothing to do with us and won’t be felt by us,” she said.

Advocates said the judgment will influence future fossil fuel approval decisions in New South Wales, and its implications are already being felt beyond the state’s borders. Aaron Morey, CEO of Western Australia’s Chamber of Minerals and Energy, said the decision created “fresh uncertainty” for his state’s liquefied natural gas industry. “All it will do is drive investment in those projects to competing countries, many of which enforce much lower environmental and safety standards than Australia does,” he said.

Tania Constable, CEO of the Minerals Council of Australia, said the ruling sent “a very negative signal to Australia’s trade and investment partners about sovereign risk in this market”.

Meanwhile, another climate case is working its way through the courts. Woodside Energy’s vast Browse gas project has faced opposition on climate grounds, with the Australian Conservation Foundation bringing its own case. Astrid Puentes Riano, the UN’s special rapporteur on the human right to a clean, healthy and sustainable environment, will join that case as an amicus curiae, or friend of the court.

The commercial stakes are considerable. The latest government figures show Australia shipped 209-million metric tonnes of thermal coal for earnings of A$31bn (R358.3bn) in 2026/27, while liquefied natural gas exports were valued at A$70bn. Whether regulators now impose conditions on scope 3 emissions, and how approval processes adapt across the states, will be the question to watch.