Federal Election 2025: Implications for Australia’s Energy and Resources Sectors
The return of the Albanese Government in the 2025 federal election brings a continuation of policies focused on Australia’s transition to a low-emissions future. While this offers significant opportunities in renewable energy and critical minerals, businesses across the energy, mining and infrastructure sectors will need to navigate both the potential benefits and the challenges posed by evolving policy and market dynamics.
The government’s emphasis on decarbonisation, energy transition and critical minerals has created a framework for growth, but the practicalities of delivering on these ambitious goals require careful consideration. Both the energy and resource sectors face a rapidly changing regulatory environment and must plan strategically to thrive in the years ahead.
Energy Transition and Infrastructure Investment: Clear Opportunities with Implementation Challenges
The government’s continued commitment to a renewable energy target of 82% by 2030, along with substantial investment in transmission infrastructure, renewable energy zones (REZs) and energy storage, is encouraging for developers and energy operators. For businesses reliant on renewable energy, these policies offer a clearer path forward, with better access to grid infrastructure and more predictable investment conditions.
However, there are practical challenges in bringing these plans to fruition. The pace of infrastructure development, particularly in transmission, may impact project timelines and costs. Grid reliability remains a key issue, especially as renewable energy penetration increases. There is a risk that delays in building the necessary transmission capacity or energy storage solutions could create bottlenecks, impacting project outcomes or even leading to price volatility in electricity markets.
For businesses in energy-intensive industries, such as mining, the transition to renewables could offer cost savings in the long term, but also introduces short-term uncertainties, especially regarding the availability of reliable, affordable power. Coordination between renewable energy expansion and energy security will be critical to avoid interruptions to supply.
Future Made in Australia: Growth with Strategic Focus
The Future Made in Australia strategy is central to the government’s push for industrial transformation, particularly in areas such as hydrogen production and critical minerals processing. By incentivising investment in these emerging sectors, the government is creating opportunities for Australian businesses to lead in the global energy transition.
While these incentives can drive significant growth, some concerns remain. The reliance on government support for new technologies, such as hydrogen and critical mineral processing, raises questions about long-term market sustainability. If these sectors are too dependent on subsidies, they could face challenges in becoming commercially viable without ongoing government intervention.
Australia’s push to establish itself as a key player in global supply chains for critical minerals like lithium and rare earths is another positive step, but there are risks associated with scaling these industries. Developing the infrastructure and skilled workforce to process minerals locally will take time and capital. There is also the possibility of market competition from other nations ramping up their own production, which could slow Australia’s progress in capturing the full value of these growing markets.
Gas and Critical Minerals: Reliable Transition Amidst Uncertainty
The National Gas Strategy ensures that gas continues to play a role in Australia’s energy mix in the short to medium term, which is crucial for heavy industries and resource sectors. While this provides stability, it also signals the government’s long-term vision of reducing dependence on gas as part of the broader decarbonisation effort.
Gas will remain an important energy source for industries such as mining, where it is used for heating and power generation, but there are challenges. Price volatility and geopolitical factors that impact global gas markets could create cost pressures for Australian industries that rely heavily on gas. Additionally, the transition away from gas in the coming decades will require significant investment in alternative technologies to ensure energy security while meeting emissions reduction goals.
The demand for critical minerals, particularly in the electric vehicle and renewable energy storage sectors, presents clear opportunities for Australia. However, there is a need for careful management of supply chains to ensure timely production and meet growing global demand. Developing local processing capacity and reducing reliance on raw exports is a key part of the strategy, but again, this will require substantial investment and coordination across industry and government.
Coal: Ongoing Role in Global Trade Amid Domestic Pressures
The coal industry faces a mixed outlook. On the one hand, coal remains a vital export product, with significant demand from countries like India and Japan, which rely on Australian thermal and metallurgical coal for energy generation and steel production. As a key part of Australia’s trade economy, coal will continue to play an important role in the near term.
However, coal producers face growing domestic and international pressure. The global push toward carbon neutrality means long-term demand for thermal coal is uncertain, and the industry will need to adapt to shifting market dynamics. Efforts to reduce carbon emissions and invest in cleaner technologies, such as carbon capture and storage (CCS), will be key to maintaining coal’s viability in the future.
The shift towards renewable energy and decarbonisation strategies presents risks for coal operations, especially as investors and consumers increasingly prioritise environmental, social and governance (ESG) factors. Coal producers will need to balance their export commitments with responsible environmental practices to ensure the longevity of the industry.
Approvals and Regulation: Streamlining for Efficiency, but Potential Delays Ahead
The government’s proposal to establish a federal Environmental Protection Agency to streamline environmental approvals for major projects is a welcome development for many businesses. By providing clearer, more consistent regulatory oversight, this reform could reduce the time it takes to move major infrastructure and resource projects forward.
However, as with any large-scale regulatory reform, there are risks associated with its implementation. The coordination of federal and state regulations, as well as the management of competing priorities, could lead to delays or inconsistencies. If not executed efficiently, these reforms could create additional administrative burdens for project developers, particularly in the early stages of major energy and resource projects.
Additionally, the government’s growing emphasis on environmental and social governance could create challenges for industries already under pressure to meet sustainability targets. Companies will need to stay ahead of regulatory changes to ensure compliance, which could increase operational costs or slow down project timelines.
Investment Conditions: A Shifting Landscape
The government’s clear commitment to renewable energy, critical minerals and industrial transformation presents strong investment opportunities in the long term. However, businesses must remain mindful of potential market fluctuations and regulatory changes that could impact profitability.
For example, energy prices remain volatile, and while renewable energy offers cost benefits over time, the transition will require considerable upfront investment in new technologies and infrastructure. Additionally, fluctuations in global demand for minerals, coupled with shifting trade relationships, could impact the mining sector.
The need for industry-wide collaboration and innovation is crucial to overcoming these challenges. Ensuring energy supply security, meeting regulatory requirements and making the most of government incentives will require careful planning and flexibility.
Conclusion
The 2025 federal election result confirms Australia’s ongoing commitment to energy transition, critical minerals development, and industrial transformation. While these policy directions offer strong growth potential, businesses in both the energy and resources sectors must carefully assess the risks and opportunities that lie ahead.
The path to achieving the government’s targets is not without its challenges. Delays in infrastructure development, market volatility and regulatory complexity could create hurdles for energy and mining companies. However, with thoughtful strategy, strong collaboration, and proactive management of risks, businesses can position themselves to take advantage of the opportunities presented by Australia’s energy and resources transformation.
