A spokeswoman for Bowen said the 4.9 per cent annual emission decline factored in expected new polluters – including gas exporters – and an additional reserve for uncertainty and would not change if particular projects went ahead or not.

“The design requires safeguard facilities to make a proportional contribution to the target,” she said.

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Verstegen said two Woodside projects that contributed more than 80 per cent of the emissions from the WA projects would impose a cost of more than $7 billion on other industries by increasing the emissions reduction they were required to do.

This estimate, based on a $40-a-tonne carbon price, did not factor in increased Australian carbon credit prices driven by increased demand.

The two projects – a $17 billion expansion of the Pluto gas export plant to process gas from the Scarborough field and a proposed life extension of the existing North West Shelf plant to 2070 – would also hugely increase global emissions when the gas is burnt.

Verstegen said the 10 projects’ total need for carbon credits was equal to 23 times the offsets delivered under the federal government’s emissions reduction fund in 2021.

He said using up a huge fraction of Australia’s limited supply of offsets denied other parts of the economy the opportunity to reduce their emissions.

”Australian climate policy must support the phase-out of fossil fuels, not subsidise the increased use of fossil fuels by supporting these very large new projects at the cost of other Australian businesses,” he said.

Woodside is not the only gas exporter looking to expand.

Santos is developing the CO2-rich Barossa field that will be exported from its Darwin facility and last week Reuters reported that Japan’s Inpex plans to expand its adjacent Ichthys gas plant by 2030.

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Each business can cut actual emissions, buy credits from other facilities that have surpassed their required emissions reductions, or purchase carbon offsets. Currently, Australian Carbon Credit Units are the only carbon offset recognised, but Bowen has signalled that international credits could be recognised in the future.

Grattan Institute energy and climate director Alison Reeve said she generally supported new facilities being given baselines to allow carbon emissions as they may use newer less polluting technology than existing plants but the treatment of new oil and gas production was “a really tough question.”

Reeve said what the high-priced international gas market looked like after the Ukraine war would have a bigger effect on new gas development than the safeguard mechanism.

“We’re seeing permanent demand destruction internationally for gas,” she said, and some countries will be increasingly wary about relying on imported gas.

Woodside and oil and gas producer lobby group APPEA were both asked about the greater emissions reduction costs imposed by new gas projects onto existing industry but did not provide an answer.

APPEA chief executive Samantha McCulloch said access to international carbon credits was important.

“Placing undue restrictions on the availability of offsets in the market will ultimately increase the cost and slow the pace of achieving net-zero across the economy,” she said.

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