Australian prime minister Anthony Albanese. Photo: Wirestock Creators / Shutterstock
Australia’s landslide vote for the Labor Party in early May has given the government a clear mandate to tackle climate change as it makes a bid with Pacific countries to host Cop31 in 2026.
More public spending to support the renewable energy transition is expected, even as the government conditionally approved an extension to 2070 of one of the biggest liquefied natural gas projects in the world. Australia is one of the biggest exporters of natural gas in the world.
“There’s an opportunity to double down on some of those key reforms and start to put the foot on the accelerator and move things forward,” said Kurt Winter, director of corporate transition at the Carbon Market Institute based in Melbourne.
But with Australia already implementing key financial green regulations, such as climate disclosures and a green taxonomy, the question is whether the legacy oil and coal producer will step up on climate finance and become a clean energy superpower.
Australia’s climate change mandate
Climate change wasn’t a core issue in the election but it may have had a bigger impact than some politicians thought. While economic stability and other issues were a factor, one of the biggest reasons Labor won by such a landslide is what are called “teals” – voters who are rightwing but care about the environment and climate issues.
“It has been part of handing the Labor government a huge landslide and also people have kind of gone, ‘we think the Labor government is going to take climate seriously so we don’t have to vote Green’,” said Karl Mallon, CEO of Climate Valuation, a climate risk analysis firm in Australia.
Australia is vulnerable to climate change. The country is no stranger to extreme weather, be it cyclones, droughts or wildfires. All that is expected to get worse in a large country where the major cities are located on the coast and could lead to increased financial losses from climate change impacts.
But it’s also Australia’s makeup that gives it the potential to jump-start the energy transition, said Mallon.
“In a global green economy, Australia could be a superpower,” he said. While there is a lot of oil and coal, “there’s [also] new minerals, lithium or rare earths, or all these things. Australia’s got all of them. So there’s a sense of, well hang on, isn’t the green economy good for us?”
Labor’s win means prime minister Anthony Albanese can continue his party’s climate change policies as they have a clear mandate from Australian voters and can commit to seeing green policies through, said Mallon.
Australia finalised mandatory climate-related financial disclosures for certain entities in April and also has a green taxonomy in place.
“I think what we’ll actually see is a depoliticisation of climate and a normalisation of climate change,” Mallon said. For financial regulators and the central bank, that means climate risk disclosures will be in step with government policy.
Potential for improvement
Tim Buckley, director of thinktank Climate Energy Finance, said he’s “confident” the Albanese government will “drive a significant uplift in renewable energy … and progressive decarbonisation of our electricity grid”.
But one of the concerns is that Labor has a history of supporting the fossil fuel industry especially when it comes to exports, said Will van de Pol, CEO of campaign group Market Forces.
“Any country that is pinning its future economic hope on fossil fuel industries is misguided, and so the Australian government now needs to really invest for the future and encourage private financing to fall behind that strategy,” he said.
That includes an increased focus on critical minerals and renewable energy, and less expansion of fossil fuels.
Buckley said he would like to see the government drastically scale back fossil fuel subsidies, which were roughly A$14.5bn for 2024-2025 and have steadily increased over the years. The irony, Buckley said, is that progress has been made thanks to the safeguard mechanism, which requires the largest emitters to gradually reduce their emissions or purchase carbon offsets to reduce emissions elsewhere.
“We’re telling them, you’ve got to reduce your emissions by 4.9% every year till 2030 but we’re going to give you a subsidy not to reduce your emissions. So it’s just illogical, and particularly in a world where trade wars are ramping up dependence and decarbonisation are actually mutually aligned goals,” he said.
Van de Pol backs more work on greenwashing, especially for banks and pension funds that claim to be aligned with the Paris Agreement but inspection of their financing and investments shows they are not.
He also would like regulators to “remove some of the barriers and roadblocks in the pension fund investment regulatory landscape that are currently acting to deter pension funds from investing more in the clean energy transition and reduce the exposure to fossil fuel expansion”.
The Albanese government has an opportunity to engage with carbon markets “to accelerate decarbonisation investments across the Australian economy”, said Winter.
“Internationally, Australia can do more to engage with the region and potentially start to think about connecting with other markets, so there is that opportunity for Australian businesses to actually realise opportunities through interlinked markets which will start to become an increasingly important consideration under the Paris Agreement”.
But regardless of the opportunities in place for the Australian government and regulators, corporate and financial actors also have a role to play, said Van de Pol.
“Policy progress is important, but it is also important to remember that the major corporate and financial actors have both the opportunity and responsibility to move ahead with their own efforts to finance the transition, regardless of who is in government and how that policy is progressing.”
This page was last updated June 4, 2025
Written by
Moriah Costa is the Editor-in-Chief of Green Central Banking and has over a decade of experience writing about banking and finance. She is an award-winning American journalist based in Paris and has written for major international publications, including Reuters, The Guardian, and S&P Global. Having grown up in water-stressed Arizona, she has always had a strong interest in bringing awareness to climate and environmental issues.
