The Federal Court has ruled that Environment Minister Tanya Plibersek does not have to consider the environmental impacts of emissions when approving coal and gas projects.

The Environmental Council of Central Queensland (ECoCeQ) took the minister to court over two coal mine extensions in New South Wales.

Under the current environmental laws, the minister does not have to directly consider the contributions that emissions from a coal or gas project would have on matters of national environmental significance, such as protected animals, plants, and places.

The case was nicknamed the "living wonders" case by the environmental group.

The appeal directly related to two coal mine extensions — Whitehaven's Narrabri Mine and the Mount Pleasant Mine in Muswellbrook — but would have also affected the approval of other coal and gas projects in the pipeline.

The ruling establishes a precedent that the federal government can ignore the risk such fossil fuel projects pose to protected plants, animals, and places when deciding whether to approve them.

In their decision, the chief judges said the case highlighted the "ill-suitedness" of the current environment laws when it comes to assessing the threat of climate change on the environment.

Ashleigh Wyles from ECoCeQ said the group was "devastated and heartbroken" by the decision.

"We're afraid this decision will open the floodgates for the minister to approve dozens of new coal and gas projects currently on her desk," she said in a statement.

"Instead of standing up to fossil fuel companies, our environment minister is standing with them in court, defending her refusal to act on the climate harm of new coal and gas mines."

Whitehaven Coal welcomed the news and told investors the decision cleared the way for the minister to make a final decision on the extension of their Narrabri mine.

It said the project "is expected to extend the life of the mine from 2031 to 2044, support around 500 continuing jobs in regional NSW, and entail a significant economic benefit to the State".

Power to interpret the law

In her risk assessment, Ms Plibersek found that any contribution to climate change and its impacts from these projects would be insignificant, and the court agreed with her.

La Trobe University Law School senior lecturer Julia Dehn said the decision preserved the status quo.

"It just highlights yet again, that our national environmental laws are broken, and that they simply aren't up to the job of addressing the biggest global threat, which is climate change," she said.

Dr Dehn said there was space within the current legislation for the minister to consider climate change.

"The minister can, under the current laws, can take into account the impact of climate change on the protected matters. She's not required to by the law, but she's able to."

The 'living wonders' case

The environment minister has veto power over major projects if they would impact "matters of national environmental significance", such as protected plants, animals and ecosystems.

ECoCeQ took the minister to court last year over the two coal mine extensions.

The mine projects haven't been approved yet but the legal action was over the minister's risk assessment prior to her final decision.

This ruling clears the way for them to be approved.

The first review was heard last year by a single Federal Court judge, who ruled that the minister's decision was legal.

The council still maintained the minister didn't properly assess the risks posed by the emissions when the coal is burnt, and appealed to a full bench of the Federal Court.

The coal expansions will still face some climate scrutiny from the government.

The federal government said emissions were considered under its Safeguard Mechanism laws, which puts a limit on the amount of emissions that can be produced from major projects.

Two defences used

The minister used two legal arguments in the case that caused a stir in the climate community.

Both arguments have nicknames – "the drug dealer's defence", and "the drop in the ocean argument".

The "drug dealer's defence" argues that Australia is filling a demand by supplying coal to international markets, and if it didn't, other coal projects would plug that gap instead. Therefore, in a climate sense, those emissions would be produced regardless, so Australia isn't contributing significantly to climate change.

The "drop in the ocean argument" is that overall, these emissions are insignificant compared to the problem, and can't be directly responsible for the environmental impacts that the ECoCeQ argues are happening.

Dr Dehn said this ignored the compounding nature of climate change.

"Climate change is precisely, as the judges acknowledged in their end of their judgement, a problem of a thousand cuts, of multiple causes causing this global harm," she said.

Dr Dehn said this left it up to the parliament to include climate change in the national environment laws.

"Courts are only ever asked to adjudicate on the narrow question between the parties that are before them. That's why I think the ball is really now in the court of parliament."

Lawyers for ECoCeQ told the court that demand for coal was declining internationally, and there was too much uncertainty to claim that the projects wouldn't cause a net increase in emissions.

A spokesman for the Department of Climate Change, Energy, the Environment and Water said they were considering the judgement but would not be commenting further as the matter remained before the court.