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20 APRIL 2026
Welcome to our news round-up. See previous issues here.
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51 DAYS LATER: MIDDLE EAST TURMOIL SHOULD DRIVE URGENT ENERGY POLICY REFORM IN BUDGET
WHAT HAS BEEN HAPPENING
Like Putin’s invasion of Ukraine, the US/Israel war on Iran drags on in a quagmire, as does the global cost-of-living crisis it has triggered. The war, launched on 28 February at Israel's behest with Trump providing US military firepower, has been characterised by extraordinary escalation and recklessness from the “leader of the free world”. Trump threatened to bomb Iran "back to the Stone Age". He warned that "a whole civilisation will die tonight" as he set a deadline for Iran to reopen the Strait of Hormuz, through which 20% of global oil and LNG supply transits – a threat condemned by the UN as flagging a potential war crime. Meanwhile, US ally Israel commenced an aggressive military incursion, including ground troops and bombing, in southern Lebanon, where a tenuous ceasefire is now purportedly in place.
Talks earlier this month in Islamabad ‘led’ by US Vice President JD Vance failed to reach a deal with Iran to end the war. As Trump then threatened a full US naval blockade of the Strait of Hormuz, oil prices topped USD $100 a barrel in response.
A fragile “ceasefire”, marred by reported violations by all parties, came into effect on 8 April and expires this week. Trump said he may not extend the ceasefire and “may have to start dropping bombs again” if negotiations fail to produce an agreement by Wednesday, and warned he continues to intend to do what is required to secure Iran's stockpile of highly enriched uranium, in "a much more unfriendly form" if necessary. The US has now reportedly seized an Iran-flagged ship in the Strait.
Iran briefly reopened the Strait in the last few days and then reversed its decision, saying it will maintain the closure until the US completely lifts its naval blockade of Iranian ports. It has made its participation in further peace talks in Pakistan now proposed by the US conditional on the latter.
While oil prices moderated under the ceasefire and temporary opening of the Strait, in the highly fluid and chaotic dynamics of the conflict, they are starting to surge again at the time of writing.
AUSTRALIA'S EXPOSURE
It appears global energy supplies will continue to be disrupted and throttled. Every Australian is feeling the consequences. Fuel prices remain volatile and elevated despite the government halving the excise, with unleaded petrol in Sydney hovering around $2.18 per litre, and significant variations across regions and states. Diesel is around $3.18 per litre.
The RBA raised the cash rate by 25 basis points to 4.10% in March, explicitly citing the conflict in the Middle East and its sharply higher fuel prices as adding materially to inflation risk. All four major banks are now predicting a further 25 basis point hike in two weeks’ time at the bank’s May meeting, which would bring the cash rate to 4.35%, piling yet more pressure onto mortgage holders already stretched by rising fuel costs. The price of fresh food is now expected to rise.
Australia's fuel reserves stand at 46 days for petrol, 31 diesel, and 30 days of jet fuel, critically below the IEA's 90-day threshold.
The government has taken emergency steps including releasing reserves and halving the fuel excise, as PM Albanese and Foreign Minister Wong have been engaging in fuel diplomacy visits to key energy partners, striking bilateral supply deals with Singapore, Brunei and Malaysia. A commitment to maintain the open flow of essential energy supplies, specifically diesel, petrol and LNG was signed with Singapore, our largest overall supplier of refined petroleum products; fuel supply guarantees were made with Brunei, which supplies 9% of Australia's diesel imports and 11% of our fertiliser-grade urea, and Malaysia, Australia's third-largest source of refined fuel and the source of 10% of our urea.
The scramble underscores just how exposed Australia's fossil fuel supply chains remain and how urgently structural reform is needed so future prime ministers aren't forced to fly around the region seeking emergency assurances on critical supply lines, particularly as permanent solutions are now commercially available, if only Australia would stop the $11bn pa and rising subsidy that reinforces our continued addiction to expensive imported diesel.
HOW CHINA IS WINNING
Meanwhile, China is quietly winning the energy security race. Chinese exports of energy storage systems have jumped 57% year-on-year in early 2026, as its extraordinary program of domestic electrification and decarbonisation insulates it from the oil shock hitting the rest of the world. The war has reinforced the need for energy independence globally and could drive strong growth in electrification and decarbonisation, with a surge in Chinese battery and EV exports expected to follow.
China’s global EV exports in the month of March 2026 were +140% yoy. Having deployed more renewable energy than the rest of the world combined since 2022, China's massive investment in batteries, EVs and clean power, as well as its long-term judicious strategic planning to secure its oil supplies, means it is far less vulnerable to Gulf disruptions than oil-dependent economies like Australia. The contrast is stark and instructive, and the lesson for Australia could not be clearer (see item on China’s 15th Five-Year Plan below).
WHAT AUSTRALIA NEEDS TO DO
Above all, this crisis must be the catalyst for a serious, sustained acceleration of Australia's energy transition, including across utility and distributed renewables, storage and infrastructure, and an economy-wide electrification program, across passenger vehicles, heavy transport, industry and mining. Every petrol car replaced by an EV, every diesel mine truck replaced by an electric one, every rooftop solar system paired with a battery, reduces Australia's exposure to the next energy shock.
A 25% revenue-based gas export levy, called for by the ACTU, and backed by Commonwealth Bank CEO Matt Comyn, crossbench MPs, and shadow industry minister Andrew Hastie could deliver $17bn in additional public revenues in 2026-27 alone. This could help redirect windfall profits currently flowing offshore in part back to Australian households and services, providing desperately needed cost of living relief for hard-hit consumers and ensuring the war-profiteering multinational gas cartel pays their fair share for exploiting our sovereign assets.
Queensland's progressive coal royalty scheme offers a model for how to do this fairly and effectively. Introduced in 2022, the scheme applies escalating royalty tiers as coal prices rise, to a maximum of 40% when prices exceed $300/t. This scheme generated for Queensland an all-time record $18.2 billion in FY2022-23 during Russia's invasion of Ukraine – vital revenues for cost of living relief, services, infrastructure and clean energy investment – and is expected to deliver $5.4 billion in 2025-26 alone. Australia's gas multinationals, profiting from the same war-driven price surge, should be taxed on precisely the same principle. However, it appears the government lacks the political courage and will to act, with reports that Albanese is walking back a review into a 25% levy.
Reform of the $11 billion annual Fuel Tax Credit Scheme, which subsidises big miners' imported diesel habit, is apparently equally non-negotiable. Why? BHP has said it will not allow it. CEF has long argued that the scheme, which hands the biggest miners hundreds of millions of taxpayer dollars every year, should be capped at $50 million per company, with any refund above that threshold redirected into electric haulage, clean energy infrastructure and decarbonisation of mining operations, or forgone.
CEF has reviewed FY2025 data and estimates BHP alone received $622m and Rio Tinto $423m in fuel tax refunds in that year – over a billion dollars in a single year extracted from health, education and aged care budgets to bankroll two of the world's most profitable miners' fossil fuel addiction. The top 18 recipients pocketed a total of $3.64bn.
Fortescue supports our proposed reform and is investing US$6.2bn to rapidly decarbonise its operations, most recently announcing its plans to eliminate diesel by fast-tracking a “world’s first” large scale green grid in the Pilbara. Laggards BHP and Rio have no excuse not to follow suit.
What is emphatically not the answer is the Coalition's proposal to produce liquid fuels from coal. Promoted by Liberal leader Angus Taylor, Nationals leader Matt Canavan and Andrew Hastie, coal-to-liquids technology is expensive, extraordinarily water-intensive, and produces nearly three times the emissions of conventional fossil fuels. It would take years to deliver, cost a fortune, and lock Australia deeper into fossil fuel dependency at precisely the moment the world is moving decisively away from it. The Coalition wants to scrap EV incentives and the home battery rebate while doubling down on coal. That, as Tim told Renew Economy, "is a new level of crazy, on so many levels."
With the May budget just weeks away, Treasurer Jim Chalmers has the Treasury modelling, the political mandate and the moral and fiscal case to make the sensible and urgent reforms that will guarantee Australia’s energy security the next time we face a global energy crisis. The question remains whether the government will act in the national interest, and the interest of all Australians, or capitulate again to the fossil fuel lobby. To do so would be a historic dereliction of duty.
>>> See our recent media on the crisis:
Al Jazeera | Australia scrambles to secure energy as war on Iran fuels uncertainty
ABC News Channel INTERVIEW | Tim on Albanese Singapore Energy Talks | ABC News Channel
SMH | We’ve survived oil shocks before – by changing our energy use. We must again
9News INTERVIEW | Tim on the war driven fuel supply crisis and the solutions on the war driven fuel supply crisis and the solutions
The Energy, OP ED | Lessons for Australia from the global energy crisis
Renew Economy | Coal to liquids: Coalition’s latest energy brain-fart is their craziest yet, and that takes some
doing
Renew Economy | “We just need more:” Why Australia should double down on renewables and EVs – not drill, baby, drill
OP ED | War on Iran signals urgent need for Australia to end risky imported oil dependency
Pearls & Irritations OP ED | Australia is giving away billions in gas profits
The Eastern Melburnian | How fuel hikes are hitting the east
Paydirt Media | Australia needs to pull out its green finger
Michael West Media | Climate Wars. Iran war speeds transition to renewable energy
ABC Radio National | Is China already the winner from the war with Iran?
The Australian Financial Review | Solar for Cuba: How Xi is turning Trump’s war into a China win
The Saturday Paper | The recession we didn’t have to talk about
The Energy | The high road out of the fuel crisis
news.com.au | Home ownership barrier to the approaching EV revolution
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FAR FROM PERFECT, BUT NEW SAFEGUARD DATA SHOWS POLICY IS MOVING IN THE RIGHT DIRECTION
This week saw the 2024-25 Safeguard Mechanism data published showing positive signs the policy is moving in the right direction in aggregate. Across the mechanism, baselines are reducing, pushing more captured facilities over their baselines and exposing the emitters to a higher proportion of emissions subject to a carbon price.
📉 208 captured facilities, down from 219 in 2023-24.
📉 Gross emissions 132.8 MtCO2-e, down 2.3% from 2023-24.
📉 Net emissions 120.3 MtCO2-e, down 5.5% from 2023-24.
📉 Total baselines 126.2 MtCO2-e, down 7.3% from 2023-24.
📈 141 facilities exceeded baselines, with a total excess of 13.7 MtCO2-e.
📈 2.6 million SMCs surrendered, up 86% from 2023-24.
📈 10.8 million ACCUs surrendered, up 42% from 2023-24.
📉 6.7 million SMCs issued, down 19.4% from 2023-24. Issued to 54 facilities.
The divergence of baselines to gross emissions is an important step in the design of the mechanism, driving demand for credit purchases and surrenders that shift demand dynamics in Australia’s credit markets to the right, moving prices upwards. This upwards pricing pressure will enable investments into onsite abatement of greenhouse emissions.
As Hugh Grossman, chief executive of RepuTex – a firm that helped design the Safeguard Mechanism reforms with the Albanese Government – highlighted this week: “the sharp rise in carbon credit usage should not be misconstrued as a failure of the scheme, which is designed to ratchet up over time and progressively increase the incentive to invest in carbon reduction technologies. Deep decarbonisation projects have long lead times, and high upfront costs. As carbon credit demand increases, and market prices continue to rise, onsite action is expected to accelerate.”
Unfortunately, 7 new trade-exposed baseline adjustment (TEBA) determinations have been provided to reduce baseline reductions for eligible facilities. In 2024-25, facilities including Bell Bay, Boyne, QLD Alumina and Yarwun alumina and aluminium smelters, Port Kembla and Whyalla steelworks, Port Pirie smelter and our largest ammonia producer had a cumulative emissions reduction contribution of just 0.98, meaning their baselines have dropped just 2% since 2023 compared to the normal 9.8%.
As Professor Frank Jotzo said in the Carbon Leakage Review, an Australian CBAM is one of the most effective pathways to protect domestic industries from carbon leakage without throttling investments into decarbonisation and electrification of Australia's manufacturing and value-added industry.
The 2024-25 data also revealed that the largest beneficiaries of Safeguard Mechanism Credits (SMCs) were some of the largest emitters in coal, oil and gas projects in Australia. In 2024-25, Shell’s FLNG offshore gas project in WA received 1.4 million SMCs, Anglo’s Capcoal coal mine received 1.1. Million SMCs, and Santos’ Moomba gas plant received 700,000 SMCs. Combined, these facilities have benefited from an effective subsidy of $120m.
There are elements of the Safeguard Mechanism to be improved, and it is a great opportunity for strengthening climate and industry policy in the forthcoming 2026-27 Safeguard Review, but positive signs in the first two years of effective operation.
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MEANWHILE IN CHINA…
The Vice Chairman of China's National Development and Reform Commission (NDRC), held a rare press conference on China's new 15th Five-Year Plan (FYP) on Friday announcing a plan to double zero emissions energy generation in the decade to 2035, just as its superpower competitor, the US, doubles down on fossil fuels.
The plan flags a "focus on strategic materials such as food and energy, … ensuring that the two rice bowls (food and energy) are firmly held in our own hands." This is the theme of Climate Energy Finance's report: "Raw Power: China locks-in global dominance of critical minerals and metals with $120bn OFDI":
In order to build “a solid foundation for resisting global energy supply shocks" – such as the one currently convulsing the world – the plan notes that China has "proactively prepared for unforeseen circumstances, focusing on strengthening the construction of energy resource production and reserve systems, vigorously promoting the comprehensive green transformation of economic development, and continuously enhancing the security and resilience of the production and supply chain.”
"Compared with the traditional energy system, the new is a clean, low-carbon, safe and efficient energy system with non-fossil energy as the main supply, fossil energy as a safety net, a new power system as a key support, and green, intelligent, and energy-saving as the energy consumption orientation, …a strategic choice to ensure energy security and gain the initiative in great power competition."
In stark contrast the US, China's 15th FYP also focuses on building international development: "The severe challenges facing the international economic and trade order, calls for actively expanding independent opening-up, promoting innovative trade development, guiding the rational and orderly cross-border layout of industrial and supply chains, and building a new system for a higher-level open economy."
We note that China remains on track to double per capita GDP by 2035 vs 2020.
>>> Press Conference Transcript: The State Council Information Office held a press conference on promoting high-quality economic and social development during the 15th Five-Year Plan period.
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OUR MEDIA |
See all of our media here.
OUR WORK |
See more of our latest work, including presentations on global decarbonisation and capital shifts.
PREVIOUS NEWS UPDATES |
Our previous newsletters covering major energy news can be accessed here.
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AJ for Tim, Matt and Fatima
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